Gl 1013 issue web

by John Yoswick

Whether or not they participate inState Farm’s Select Service program,shops and parts vendors still have lotsof questions and concerns about Part-sTrader as State Farm continues itsroll-out of the program. Here is someadditional information addressingsome of those questions that repre-sentatives of State Farm or Part-sTrader have provided.

Roll-out schedule. PartsTraderrolled out in September in major mar-kets in California, Nevada and Utah,and in October in Michigan and Ohio.It will reach major markets in Wis-consin, Illinois, Indiana, Kentuckyand Tennessee later this year.

Vendor choice. Shops are notrequired to get price quotes fromanyone beyond their designated pre-ferred dealer. In fact, Partstrader’s

Dale Sailer said, the system defaultsto sending a job’s parts list only tothe shop’s preferred dealer, thoughthe shop can expand the search fromthis default. State Farm does not getdata about whether a Select Serviceshop’s parts list for a job went onlyto the shop’s preferred dealer forquotes.

A shop can “direct order” a partthrough the system without waitingfor any parts quotes; State Farm doesknow, however, if a Select Serviceshop does this.

And if a dealer always gives ashop the same discount, the dealer canset the system up to automatically re-spond with that discount to all re-quests for quotes from that shop.

“Dealers don’t have to hire awhole bunch of people to fill outquotes,” Sailer said.

The Indiana Autobody Association(IABA) has announced its full sup-port of the Society of Collision RepairSpecialists' (SCRS) recent positionstatement on insurer mandates (see p.8 this issue).

The IABA believes that all repairdecisions, vendor selections and busi-ness processes should be left to thecollision repair professionals whowork on vehicles and have been en-trusted by the vehicle owners to makecorrect repair decisions.

The IABA also believes that theintent of these mandated programs isnot to improve efficiency in any cur-rent business process, or for the ben-

efit of the vehicle owner. It believesthese attempts are solely driven by in-surers and other third parties seekingto make additional profits and gaincontrol of the collision repair businessthrough practices that can be consid-ered extortion and tortious interfer-ence, as previously identified in the1963 Consent Decree (see page 15),and the IABA will pursue to deterthese actions using the fullest extentof the law.

ASA President Dan Risley hasalso made ASA’s position clear that itis against all forms of direct repairprogram requirements to use specificsuppliers or products (see p. 19.)

Indiana Autobody Association ExpressesSupport for SCRS Position Statement

State Farm and PartsTrader Offer More Infoon Roll-Out, Use of the System

Special SNAPSHOT of the Collision Industry, survey byCollision Repair Educational Foundation and I-CAR p. 22

The Mississippi Collision Repair As-sociation and Parts Suppliers are seek-ing industry support in suit againstState Farm and PartsTrader. Over 30plaintiffs, mostly Mississippi bodyshop owners, have filed an injunctionagainst State Farm and PartsTrader inan attempt to prohibit the insurer fromforcing any Select Service shop inMississippi to use PartsTrader.

The suit was filed Aug. 28 byJackson, MS-based attorney for thenearly three dozen plaintiffs, JohnArthur Eaves, Jr., in the HindsCounty, MS, Chancery Court againstState Farm Mutual Automobile Insur-ance Company and PartsTrader LLC.

Plaintiff include the MississippiCollision Repair Association (MSCRA)OEM parts dealers and other parts sup-pliers and dozens of collision repairprincipals, including prominent local re-pairers John Mosley (Clinton BodyShop) and Doug White (Capitol BodyShop).

The suit seeks the court’s decla-tory judgment and injuction to blockState Farm from requiring the Part-sTrader ordering process in Missis-sippi. The requested injunction is to:

1) Prohibit the Defendants fromforcing implementation of Part-sTrader in the State Farm Select Serv-

Mississippi Collision Repair Association andParts Suppliers File Suit Against PartsTrader

See More on PartsTrader, Page 24

See Suit Against PartsTrader, Page 14

by Barrett Smith

Eddie Quintela, Owner and Presidentof Collision Concepts of DelrayBeach, FL has once again found itnecessary to file a lawsuit against 21stCentury Insurance on behalf of hiscustomer who made a claim undertheir policy with the carrier.

In 2012, on behalf of his com-pany’s customers, Quintela filed threeseparate lawsuits against 21st Centuryof which the insurer agreed to settlebefore the trial dates. In addition tothe disputed amounts, the insurer paidall of Eddie’s legal fees and costs.

In spite of recent claims whereasthe insurer has provided full pay-ments, as of late, 21st Century claimsrepresentatives have elected to onceagain deny payments for the repairer’s

posted labor rates, processes and pro-cedures as deemed to be reasonable

and necessary toproperly restoretheir customer’svehicle. As Such,Quintela, on be-half of and withthe full support ofhis customer, hasfound it necessary

to once again file a lawsuit against theinsurer on his customer’s behalf forsuch denials.

“As in the past with this com-pany”, states Eddie, “they pay us onlyafter we file suit but before they gobefore a judge and/or jury. Thereafterthey pay in full for every needed ma-terial, process and rates for a while…

See Quintela, Page 19

Quintela Sues 21st Century A Second Timefor Short-Pays, Makes ‘Cents out of Sense’

Eddie Quintela

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Audi Wholesale Parts Dealers . . . . 38BASF . . . . . . . . . . . . . . . . . . . . . . . . . 5BMW Wholesale Parts Dealers . . . . 24Car-Part Pro. . . . . . . . . . . . . . . . . . . 26Celette Inc. . . . . . . . . . . . . . . . . . . . 15Certified Automotive PartsAssociation (CAPA). . . . . . . . . . . 17

Chief Automotive. . . . . . . . . . . . . . . . 9CJ, Inc. - Signature - Star-A-Liner . . 31Classifieds. . . . . . . . . . . . . . . . . . . . 38Equalizer . . . . . . . . . . . . . . . . . . . . . . 6Erhard BMW of Bloomfield Hills . . . 29Erhard BMW of Farmington Hills . . 29Ford Wholesale Parts Dealers . . . . 37Forklift Wrecker . . . . . . . . . . . . . . . . 12Ganley Auto Group, Inc . . . . . . . . . 24GM Wholesale Parts Dealers . . . . . 34Graham Auto Mall . . . . . . . . . . . . . . 28Honda-Acura Wholesale PartsDealers. . . . . . . . . . . . . . . . . . 20-21

Hyundai Wholesale Parts Dealers . 34Jake Sweeney BMW. . . . . . . . . . . . 30Jake Sweeney Chevrolet . . . . . . . . 30

KBS Coatings . . . . . . . . . . . . . . . . . 16Laurel Auto Group of Westmont . . . 39Lexus Wholesale Parts Dealers . . . 36Malco. . . . . . . . . . . . . . . . . . . . . . . . 11Mazda Wholesale Parts Dealers . . . 35Mercedes-Benz. . . . . . . . . . . . . . . . 13Mitchell International. . . . . . . . . . . . . 8MOPAR Wholesale Parts Dealers . . 25Motor Guard Corporation . . . . . . . . 10PPG . . . . . . . . . . . . . . . . . . . . . . . . . . 2PreFab Ads . . . . . . . . . . . . . . . . . . . . 4Preval Spray Gun . . . . . . . . . . . . . . 40Rare Parts, Inc. . . . . . . . . . . . . . . . . 18SATA Spray Equipment . . . . . . . . . 14Sherwin-Williams AutomotiveFinishes. . . . . . . . . . . . . . . . . 18, 19

Subaru Wholesale Parts Dealers . . 36Toyota of Grand Rapids . . . . . . . . . 10Toyota Wholesale Parts Dealers . . . 35Valspar Automotive . . . . . . . . . . . . . . 7Volkswagen Wholesale Parts Dealers. 37Walcom USA. . . . . . . . . . . . . . . . . . 27

Inde

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ContentsREGIONAL

A Flood of Problems for a Negaunee, MI,

Body Shop. . . . . . . . . . . . . . . . . . . . . . . 6

ABRA Helps Raise $30,000 for Veterans’

Service Dogs . . . . . . . . . . . . . . . . . . . . 38

Alpine Glass’ $150,000 Short-Pay Award

through Arbitration v. AAA Insurance Co.. 6

ASA Michigan to Host Shop Management

Classes . . . . . . . . . . . . . . . . . . . . . . . . 4

CARSTAR Adds a Shop in Wood River, IL. . 6

CARSTAR Adds Another Illinois Shop

in Roselle . . . . . . . . . . . . . . . . . . . . . . . 6

EXCEL Trade Show Hosted by AASP/MO

was Major Success . . . . . . . . . . . . . . . 28

IABA Golf Tournament Helps Support

the Future Generation . . . . . . . . . . . . . . 18

Illinois Enacts Auto Service Ancillary

Products Bill . . . . . . . . . . . . . . . . . . . . . 6

Illinois Newest State with Electronic

Insurance Proof . . . . . . . . . . . . . . . . . . . 4

Indiana Autobody Association Expresses

Support for SCRS Position Statement. . . 1

Marshall Auto Body Donates Vehicle to

SE WI Resident . . . . . . . . . . . . . . . . . . . 4

MI Bill Would Exempt Some Historic

Vehicles from Plates . . . . . . . . . . . . . . . 4

Midwest Collision Center is First Body Shop

in Michigan to Replace Every Fluorescent

Bulb with LED Lights . . . . . . . . . . . . . . 10

Mississippi Collision Repair Association

and Parts Suppliers File Suit Against

PartsTrader . . . . . . . . . . . . . . . . . . . . . . 1

Ohio Auto Insurance Premiums Increased

by the Largest Percentage in a Decade

Last Year . . . . . . . . . . . . . . . . . . . . . . 16

Ohio Dealership Group is Faced with

Class Action Claim. . . . . . . . . . . . . . . . 10

Russ Darrow Opens New Superstore in WI . 27

State Farm Awards $3K to MN State

Collision Program . . . . . . . . . . . . . . . . . 4

Vendors Support 5th Annual Chicago

Automotive Networking Conference

Held September 20–22 at Crown Plaza . . 4

COLUMNISTS

Attanasio - Is Radio Advertising a Sound

Decision For Body Shops?. . . . . . . . . . 36

Insider - Eliminating the “Have Not”

Shops Will Help the “Haves” . . . . . . . . 12

NATIONAL

ASA Launches New Website, Improves

Repairer Tools . . . . . . . . . . . . . . . . . . . 16

ASA President Risley Writes to State

Farm’s Ed Rust Jr. Suggesting

Stopping Mandates . . . . . . . . . . . . . . . 19

ASRW’s New Format Will Be ‘Vastly

Different Experience’ . . . . . . . . . . . . . . 38

Automotive Instructors Get Special

AAPEX 2013 Invite . . . . . . . . . . . . . . . 16

Best Way to Research New Product

at SEMA Show. . . . . . . . . . . . . . . . . . . 16

BLS Says Collision Industry Production

Rose in June . . . . . . . . . . . . . . . . . . . . 35

Caliber Collision Opens Two New

Locations in CO and CA . . . . . . . . . . . . 16

Daimler to Sell Self-Driving Production

Car by 2020 . . . . . . . . . . . . . . . . . . . . 35

Franchitti Reunites with The Henry Ford

and the Jim Clark Lotus-Ford 38/1

Indianapolis Winner as Part of Clark

Tribute at 2013 Goodwood Revival . . . . 26

GA and CA Most Expensive States to

Own a Car . . . . . . . . . . . . . . . . . . . . . . 35

MD Shop Owners Prevail Against Short

Pays—No DRP, No Problem. . . . . . . . . 30

Mitchell Announces its New Reputation

Manager Package . . . . . . . . . . . . . . . . 38

NABC Partners with ATT on Anti-Texting

Campaign . . . . . . . . . . . . . . . . . . . . . . 35

New SRS Checklist Available . . . . . . . . . . 37

Quintela Sues 21st Century A Second

Time for Short-Pays, Makes ‘Cents

out of Sense’ . . . . . . . . . . . . . . . . . . . . . 1

SCRS Issues Position Statement on

Insurer Mandates. . . . . . . . . . . . . . . . . . 8

Sherwin-Williams and Online Blueprint

Provider Team Up . . . . . . . . . . . . . . . . 38

Snapshot of the Collision Repair Industry . 22

State Farm and PartsTrader Offer More

Info on Roll-Out, Use of the System . . . . 1

The 1963 Federal Consent Decree . . . . . . 15

www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 3

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Legislation has been introduced inthe Michigan Senate to exempt his-toric military vehicles from the re-quirement that they display a licenseplate unless the vehicle was origi-nally manufactured with lighting andmounting provisions for a plate.Under the bill, if the plate is not at-tached to the exterior of the historicmilitary vehicle, it must be presentin the vehicle and available upon de-mand by law-enforcement officers.In Michigan, “historic military vehi-cle” means a vehicle, including atrailer, regardless of the vehicle’ssize, weight or year of manufacture,that was manufactured for use in anycountry’s military forces and ismaintained to represent its militarydesign and markings accurately.

MI Bill Would Exempt SomeHistoric Vehicles from Plates

State Farm has awarded a $3,000grant to Minnesota State Commu-nity and Technical College’s AutoBody Collision Technology Pro-gram, to be used for scholarshipsand for tools and equipment used bythe students. “We are grateful to re-ceive the grant and to have the sup-port of State Farm,” said M StatePresident Peggy Kennedy. “At MState we are committed to educat-ing the region’s workforce, and thiswill certainly have a significant im-pact on the Auto Body program.”

The Auto Body program, lo-cated on the Detroit Lakes campus,offers an associate of applied sci-ence degree and a diploma.

State Farm Public Affairs Spe-cialist Sonia O’Brien said the com-pany’s support of the M Stateprogram is a reflection of its com-mitment to Minnesota communities,and the company is pleased to beable to partner with the DetroitLakes campus to help students ac-quire the career skills they need tosucceed.

State Farm Awards $3K toMN State Collision Program

Gov. Pat Quinn signed a new billinto law that allows drivers to pro-vide law enforcement officers withelectronic proof of insurance onsmartphones and other similar de-vices when prompted. Effective im-mediately, drivers will no longer berequired to have the traditional paperproof of insurance to avoid a ticket.The option for digital proof of insur-ance is growing in popularity. Moreand more insurance companies offerapps for customers to download onelectronic devices.

The trend toward electronic in-surance cards is seen throughout thenation. Illinois is one of 27 states toadopt the policy, according to theProperty Casualty Insurers Associa-tion of America.

Seventeen states have approvedelectronic proof in 2013. Missouri’snew law takes effect now and Texas’rule will be implemented Sunday,Sept. 1.

The Illinois law relieves law en-forcement from any liability fordamage to an electronic device whenit’s presented as proof of insurance.However, law enforcement is pro-hibited from accessing any other in-formation on the phone or device.

Illinois Newest State withElectronic Insurance Proof

Marshall Auto Body is gearing up todonate a 2004 Buick Rendezvous toa veteran living in Milwaukee,Ozaukee, Racine, Washington orWaukesha County in SoutheasternWisconsin. The company is work-ing in conjunction with The Wis-consin American Legion Foundationto find a recipient for the Ren-dezvous that was donated by Farm-ers Insurance. The goal is to help aveteran in the local community be-cause reliable transportation is im-portant and can provide a familywith a new lease on life. The Amer-ican Legion will qualify a deservingOEF/OIF veteran or family living inMilwaukee, Ozaukee, Racine,Washington or Waukesha County ofSoutheastern Wisconsin for this ve-hicle. An application is required andmust be submitted to be consideredto receive this vehicle. Applicationscan be found by visiting the Mar-shall Auto Body website or Face-book page. Any OEF/OIF veterans’and their families living in Milwau-kee, Ozaukee, Racine, Washingtonor Waukesha County of Southeast-ern Wisconsin can apply beginningAug. 26, 2013. The applicationdeadline is Oct. 11, 2013.

Marshall Auto Body DonatesVehicle to SE WI Resident

Two shop management classeshosted by ASA Michigan’s BobCooper will present: “High ImpactSales” (morning) and “8 Steps to amore Profitable Shop” (afternoon)on Saturday September 28th atLansing Community College. Reg-istration starts at $75 (includes both3 hour classes). Seating is limitedhttp://www.thegreatlakesevent.com/class-descriptions-registration-link/

ASA Michigan to Host ShopManagement Classes

Key industry vendors featuring hands-on demonstrations showcasing the lat-est technology, tools, parts and moreare on the schedule for the 5th AnnualAutomotive Service Association ofIllinois (ASA-Illinois) Chicago Auto-motive Networking (C.A.N.) Confer-ence, scheduled for Friday, September20 through Sunday, September 22,2013 at the Crowne Plaza ChicagoO’Hare in Rosemont, IL.

The 2013 exhibitor line-up in-cludes AES Wave, ATI, AutomotiveSeminars, Auto Vitals, Inc., BOSCH,Combined Worksite Solutions, DEL-PHI, DemandForce, Fox Valley Fire& Safety, Heil Insurance, Herb KuhnEquipment Sales, IEPA, Jasper En-gines, KUKUI, LKQ, Mitchell 1,NAPA Auto Parts, Quality Oil, Snap-on and WorldPac. “We are very ex-cited about the vendors we havejoining us this year at the C.A.N. Con-ference,” said Dave Walter, Presidentof ASA-Illinois. “People from all overthe United States attend C.A.N., andwe expect this conference to be thebest we’ve ever had with the vendors,

instructors and classes we’re featuringthis year.”

A new element added to the2013 C.A.N. Conference will be liveinterviews and streaming video ofvendors, instructors and attendeesfrom the tradeshow floor. This willprovide conference participants witha unique opportunity to performequipment demonstrations, share ed-ucation highlights and conference ex-periences live from the show. TheC.A.N. Conference is open to shopowners, service writers, advancedand intermediate technicians. Don’tdelay, attendee and vendor registra-tion is open now.

For additional information re-garding classes, instructors, exhibitopportunities, online registration andhotel details, please visit the confer-ence website at www.asacanconfer-ence.com. Or, contact Sharon Ozimekand Deb Bullwinkel, co-executive di-rectors of ASA-Illinois, via email [email protected] or by phone at(877) 272-4445, (773) 919-3875 or(630) 430-3832.

Vendors Support 5th Annual Chicago Automotive Network-ing Conference Held September 20–22 at Crown Plaza

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Alpine Glass of Minneapolis, MN,has been awarded an arbitrationaward against AAA Insurance Co. for$149,500.57. The award represents100 percent of the amount soughtthrough arbitration for short paysfrom the insurer. Mike Reid, presi-dent of Alpine Glass, says the com-pany won this arbitration because theinsurer was unable to prove Alpinehad unfair billing practices.

“It’s sad to see glass companiesfailing as a result of being desperateand accepting reimbursements thatare ridiculously below what is fairand reasonable,” says Reid. “Glasscompanies are losing out by not fight-ing for a fair price. We have showntime and time again that our pricesare fair and reasonable.”

According to court documents,“Alpine asserts, as assignee of its cus-tomers, that it is entitled to the fullamount billed for glass repair and re-placement work governed by theterms of the AAA insurance policy.The claims are from July 6, 2006,through May 9, 2012.”

“AAA did not conduct a surveyof the ‘area where the car is to be re-paired,’” writes arbitrator David T.Magnuson in the arbitration award.“The short-pays of Alpine’s invoiceswas systematic and consistent, butnot based upon written estimates,competitive bids or an agreement.

AAA did not comply [with] the termsof the policy in processing Alpine’sclaims.”

“Alpine will continue to fightagainst insurers who short pay our in-voices and, if necessary, we will con-tinue to file for arbitration in order tobe paid what is right,” he adds.

In July 2012, Alpine won a six-figure award against Liberty Mutualfor short pays. Additional wins in-clude six other awards from IllinoisFarmers, Allstate, American Family,USAA, Integrity and Guide One.

According to the arbitrationaward, “The dispute arose as a resultof claimant Alpine Glass’s insurancepolicy with respondent whereinclaimant pays for glass repair and re-placement work, get as assignmentfor each individual claim, and thensubmits the claims to respondentAAA Insurance Co. A third-party ad-ministrator, in turn, pays pursuant tothe insurance policy what they deemto be the amount charged by a major-ity of the repair market for glass re-pair and replacement claims.”

The recent award is Alpine’seighth within the last two years; thetotal of the awards is now approach-ing $3 million. Alpine Glass has beenvictorious in all of its arbitrationcases. A representative for AAA hadnot responded to request for commentat press time.

Alpine Glass’ $150,000 Short-Pay Awardthrough Arbitration v. AAA Insurance Co.

A new body shop that Fox Ne-gaunee Auto Dealers is setting uphas created some controversy withthe neighborhood. At the most re-cent City Council meeting, East-wood Apostolic Church membersexplained their concerns with thestructure located across from theirchurch on Maas Street.

The area has had issues withflooding, particularly this pastspring. Fox Negaunee is building aretention pond on their property,but the church feels it's not quiteenough.

"We are not against the build-ing and business; we are against thepond. Get rid of the pond, and ifthey're going to have the pond, lineit and meter the water that's going inthe ground so it doesn't cause aproblem for everybody else," saidLeonard Laurila from the EastwoodApostolic Church. The building iscurrently under construction. Cityofficials say they're trying to find asolution that everybody can agreeon.

The city plans to put a pipe inunderneath Maas Street. They hopethat will also help divert some of thewater that builds up in the area.

A Flood of Problems for aNegaunee, MI, Body Shop

CARSTAR is adding a new locationin the Chicago region with a new lo-cation in Roselle, IL—CARSTARFriendly of Roselle—expanding itsoffering of high-quality collision re-pair and excellent service through-out the Windy City. Owned byRandy Yockey and managed byEric Schmit, CARSTAR Friendlyof Roselle is located at 333 E. IrvingPark Rd., Roselle, IL. Yockey is ex-panding the automotive complexthat includes the dealership and aQuickLane Tire and Auto Center.

“As a franchised Ford dealerwith 41 years of experience I recog-nize that quality workmanship,along with communication, drivescustomer satisfaction,” said Yockey.“Realizing the industry haschanged, I decided to entertain op-portunities to grow our collisioncenter. Looking and understandingthe competition, it has become crys-tal clear that the CARSTAR fran-chise has not only the reputation butthe strength to propel our businessto the next level.”

CARSTAR Adds AnotherIllinois Shop in Roselle

On August 9, Illinois enacted HB1460, which expands the definitionof “service contract” in the state’sInsurance Code to include ancillaryauto service contracts—that is, con-tracts related to the repair or re-placement of tires, repair of certaindamage to motor vehicles, or thatprovide for protective systems ap-plied to a vehicle.

By expanding the definition,the new law requires any providerof such ancillary products operatingin Illinois to register with the IllinoisDepartment of Insurance, pay an an-nual registration fee, and to desig-nate an individual for service ofprocess.

Ancillary auto productproviders also will be subject to,among other things, financial re-quirements, disclosure rules, andrecord keeping requirements, andwill be subject to examination andenforcement by the Illinois Depart-ment of Insurance.

The changes take effect on Jan-uary 1, 2014.

Illinois Enacts Auto ServiceAncillary Products Bill

CARSTAR Auto Body Repair Ex-perts has announced that Stock AutoBody CARSTAR in Wood River,Ill., has joined is national network ofcollision repair centers.

Stock Auto Body CARSTAR isindependently owned by KentEberhart. Eberhart has been in theauto body repair business since 1980and opened Stock Auto Body in1987.

“We joined CARSTAR to helpus gain future sustainability in thischanging collision industry for ourcustomers, our employees and our-selves,” said Eberhart.

“We congratulate Kent andSuzanne Eberhart on joining theCARSTAR family and their com-mitment to operational excellence,”said David Byers, CEO ofCARSTAR Auto Body Repair Ex-perts. “We are thrilled to expand ourcollision repair family’s presence inthe St. Louis region with this top-notch collision repair center.”

CARSTAR is North America’slargest multi-shop operator network.

CARSTAR Adds a Shop inWood River, Illinois

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The Society of Collision Repair Spe-cialists (SCRS) has issued a positionstatement regarding insurer mandates.It reads as follows:

In representation of collision re-pair businesses across the UnitedStates, The Society of Collision Re-pair Specialists (SCRS) takes excep-tion to business mandates thatproperty and casualty insurers imposeupon collision repair businesses; par-ticularly those that specify requiredvendors, business platforms or inter-nal processes that must be followed inorder to be included in, or avoid beingexcluded from, certain lines of work.As an example, insurer mandates sur-rounding parts procurement platformsmay inhibit independent collision re-pair businesses from utilizing partsvendors with whom they have an ex-isting relationship, providing insurerswith greater influence and controlover the parts supply chain. SCRS be-lieves this control falls outside of thescope of the insurance business. Someinsurers are stipulating agreement tothese terms, as a condition of beingrecognized in Direct Repair Programs(DRP). SCRS supports efforts that

rightfully seek to eliminate such in-trusion into the collision repair busi-ness, and enforcement of existinglaws, regulations and codes that cur-rently prohibit such actions. It is theopinion of SCRS that voluntary agree-ments cannot include stipulationswhich violate existing laws, rules andregulations.

SCRS believes that collisionbusinesses are capable of establishingsuccessful vendor relationships andinternal processes that will best ac-commodate the needs of the con-sumer, and that service providers willcontinue to respond to the market withincreasingly creative solutions thatdrive performance for their customersand the respective market entities. Webelieve that solutions with tangiblevalue propositions will be utilized andsupported by the marketplace withoutthe undue influence of insurer man-date.

The encouragement to embraceopen platforms to enhance perform-ance, rather than rely on exclusionaryprogram agreements influenced byone or more of the participants, fol-lows an acknowledgement from State

Farm Insurance that the nation’slargest carrier is transitioning from“piloting” the requirement to use thePartsTrader online part sourcing andordering program, in select market-places, to a tiered national rollout.State Farm had previously included aprovision in its Select Service Agree-ment requiring participating repairersto agree to utilize automated replace-ment parts locating services or appli-cations, as specified by the insurer, forordering and/or sourcing replacementparts.

According to SCRS, as the pro-gram rollout developed, so did therules of engagement surrounding it.The organization provided a brief run-down of the history of the program:

● In May of 2012, State Farm is-sued a video on its B2B website whereAuto Estimatics Consultant GeorgeAvery expressed:

“... repairers are in control of whoprovides your parts, regardless of thepart type. We have worked with Part-sTrader on a process that [enables]you to maintain your relationships andnegotiated deals with your vendors.We understand that relationships with

your suppliers are important in man-aging your business, much in the sameway we value our relationship withyou.”

● In an email distributed withinthe same month, PartsTrader commu-nicated to suppliers who had declinedthe offer to participate in the quotingprocess that:

“State Farm Select Service re-pairers will be placing all parts ordersrelated to State Farm claims via thePartsTrader application from [date].During our discussion you indicatedthat this was not in your interest toregister online with PartsTrader toparticipate in the intended parts pro-curement process. We respect yourchoice and want to make sure you arestill able to receive those State Farmorders. With that stated, it is not ourintent to come between the relation-ships you have built with the shops.This email is to confirm that we havenow modified your company’s con-figuration to be a ‘Fax Only Supplier.’This means that a repairer can placean order to your company in Part-sTrader, and we will send that order toyou at the fax number... Note: This


SCRS Issues Position Statement on Insurer Mandates

process means you will not participatein the quoting process, and repairersmay order from suppliers that havequoted first, then direct order any re-maining parts to you via the ‘directonly’ option.”● Just over a year later, the option tonot be a fully active participating sup-plier was revoked. In an email com-munication issued in July of 2013,PartsTrader advised Select Service re-pair facilities in certain markets that:

“As you were notified in a previ-ous email, PartsTrader is discontinu-ing the fax only option for supplierswho choose not to utilize the Part-sTrader platform as a fully active par-ticipating supplier... When you usePartsTrader after July 31, supplierswhich you have nominated to usePartsTrader but have not yet begun touse the PartsTrader application to pro-vide quotes or accept orders, will nolonger appear on your system as anavailable vendor, and therefore willno longer be able to receive ordersplaced in PartsTrader via fax.... Wewould of course like you to encouragethese suppliers to participate, but youshould also identify suppliers forthose makes who are participating toavoid any purchasing issues on Au-

gust 1 or later. We can assure you thatwe do have participating dealers cov-ering every major vehicle make in the[market] area.”

According to SCRS, “The rulesof the game are changing and it is ap-parent that maintaining the relation-ships and negotiated deals ofparticipating repair facilities is only apriority, so long as all involved sub-mit to do business in the manner pre-scribed by State Farm Insurance, andother carriers with similar programs.Today these mandates address partssourcing and ordering, but there isvalid concern that they open the doorto future market manipulation and in-fluence over other similarly criticalcollision businesses purchasing habitsas well.”


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Midwest Collision Center Inc. an-nounced a major green initiative to re-place their fluorescent lighting withLED lighting from Green UniversalSolutions Co. (GUSCO) becoming thefirst automotive body repair center inMichigan to make the change to re-place every light with LED lighting.

“Besides being responsible ingoing green with LED, you get somany advantages ... better and brighterlight, tremendous savings in energyused, the cost of the energy, replace-ment and maintenance costs with someof the LED lighting having an L70 rat-ing of 200,000 hours,” says Ed Schip-pers, co-owner of Midwest Collision.“It really was a no brainer, a win-win-win for our decision to go LED. Wewin with all the savings... computed tobe over $130,000 during first 10 yearsbased on our current energy bills. Ouremployees win with better, cleaner,brighter, safer LED light. Our environ-ment wins because when we save en-ergy, we save all the pollutants thathappen from creating that electricity.”

“I also appreciate the way thatSteven Kuivenhoven, energy consult-ant from GUSCO, approached us... inthat he had a conversation, he askedquestions, listened to us share how our

current lighting was inadequate, heasked for copies of our energy bills,took numerous light readings through-out the shop, then his findings weresubmitted and a proposal was createdby the engineers at GUSCO. He thenshared the proposal with us. It was verycomplete with all data we needed tomake a decision,” says Ed and contin-ues “GUSCO even fills out the con-sumers energy incentive paperwork forus... how great is that?” Joe Brule, co-owner of Midwest Collision adds, “Thecars themselves are equipped withmore and more LEDs. LEDs are every-where. It’s the best time to upgrade formany reasons including the uncertaintyabout future electric rates. ConsumersEnergy supports the upgrade with anincentive and because GUSCO wasable to cut our energy 76% we will, ac-cording to our company accountant, beeligible for a 179D tax deduction.”

“We at Midwest are all anxious toexperience the LED lighting with thescheduled installation being the firstpart of September. “For the sake of ourenvironment, your employees andyour pocketbook, I would encourageevery auto repair facility to contactSteven at GUSCO 269-779-6005 andlearn about the savings.”

Midwest Collision Center is First Body Shop in Michigan toReplace Every Fluorescent Bulb with LED LightsThe Ohio Court of Appeals has upheld

class certification in a suit alleging thatthe arbitration clause in a Cleveland-area dealership group’s sales agreementwas unconscionable and unenforceable,according to Eric Freedmanwriting inAutomotive News.

The 2-1 ruling against GanleyChevrolet and Ganley AutomotiveStores came in a spot delivery-relateddispute that began in March 2001, afterJeffrey and Stacy Felix purchased a2000 Chevy Blazer.

Ganley has asked the appellatecourt for reconsideration and, if that’sunsuccessful, may seek state SupremeCourt review, says dealership lawyerSteven Dever of Lakewood, Ohio.

The plaintiffs contend that Ganleytold them they were approved for 0 per-cent financing and let them take homethe Blazer. But a few days later, Ganleytold them GMAC would approve only1.9 percent financing, which they ac-cepted. More than a month later, theywere told GMAC had rejected them.The dealership then found a bank thatwould provide a 9.4 percent loan, but theFelixes refused to sign a new agreementat that rate, the decision said. The suit al-leges “bait-and-switch tactics,” violationof the state Consumer Sales PracticesAct, misrepresentation, and emotional

distress. It includes individual and class-action claims and challenges the validityof the arbitration provision in the salesagreement. A lower-court judge rejectedGanley’s request for arbitration and ap-proved class-action status on behalf ofall consumers whose sales agreementwith any Ganley store had the same pro-vision. Ganley Automotive Stores has34 franchises in northern Ohio.

The judge found the provision am-biguous and misleading and awarded$200 in damages to each of the “thou-sands of members” of the class. It coverscustomers who signed such agreementsfrom two years before the lawsuit wasfiled in June 2001 until the companychanged the provision in 2007, saidplaintiffs’ lawyer Mark Schlachet ofCleveland Heights, Ohio.

However, only a “handful” ofthose customers went to arbitration,Dever said. He added: “How can youquantify the harm when people had nocomplaint? The analysis is fundamen-tally flawed.” The appeals court heldthat class-action status was appropriateunder the consumer protection law.

Appeals Judge Mary Kilbane saidthe trial judge, who handled the case for11 years, had “conducted a rigorousanalysis into whether the prerequisitesfor class certification have been satisfied.

Ohio Dealership Group is Faced with Class Action Claim


It wasn’t so long ago that all shopswere created equal. If you had tools,four walls and a sign, you could be abody shop. Actually, I should remove“four walls” from the list; there weremany “shops” repairing cars that did-n’t have one wall, let alone four.

At any rate, thequalifications to repaira car didn’t includespecial equipment ortraining. Starting abody shop business re-quired not much morethan proclaiming thatyou were a body man.

At that time,thankfully, direct re-pair programs werevirtually non-exis-tent. I can’t imaginewhat we would have done during thattime period if direct repair programswere prevalent. How would an insur-ance company identify which shops torefer their customers to?

Even though shops have evolvedsignificantly since that time, the samedilemma exists for insurance compa-nies today: Which shops do we referour customers to? Without having theintimate knowledge of your shop oryour competitors, finding the mostqualified shops in a market is as aboutas easy as developing a national healthcare plan.

Why does an insurance companycare where their insureds have the ve-hicles fixed? There are a lot of reasons.The cost of the repair is a motivatingfactor in finding the right shop, al-though it no longer is the most impor-tant. Back in the early 1980s whenthere were more than 70,000 shops inthe United States, price was the biggestconcern. Customer service wasn’teven on our radar. The quality of therepair was assumed to be no better orworse at one shop than at anotherdown the street. In fact, the biggestconcern I had with a shop was deter-mining whether or not the dog in backlot was chained up so I could write myestimate. Everyone was assumed to beable to perform a proper repair.

For the younger generation read-ing this, it’s probably difficult for youto understand what I’m talking about.

To put it in proper perspective, someshops would need to wet down the dirtfloor before painting a car. It wasn’tuncommon to see shops pulling full-frame vehicles with anything that wasstationary. And one of my personal fa-vorites was watching the old-time

body men use a torch. A torch in thelate 1970s and early 1980s was aboutas useful as duct tape.

The industry has changed dramat-ically over the past few decades and theunprofessional, uneducated shop ownerhas been replaced. Professional, edu-cated and astute operators have takenthe industry to the next level.

Now customer service is reli-giously the topic of conversation. In-surance executives are facing increasedscrutiny and pressure to improve cus-tomer service scores. Policyholder re-tention is the lowest the industry hasseen. Insurance has become a com-modity where price is the single mostmotivating factor to consumers. Thereare intense battles happening betweenthe Top 10 carriers for policyholders,as evidenced by the marketing dollarsbeing spent.

Ironically, our biggest challengeisn’t finding new customers; it’s keep-ing the ones we have. Retention is di-rectly correlated to customer service.Unfortunately, the collision repair fa-cility and insurance company typi-cally share a common fate relative tocustomer service. If the customer likesthe shop, more often than not, the cus-tomer will like the insurance com-pany. Conversely, if they don’t likeyou, they don’t like us. Thus, the im-portance to us of finding the rightshop to repair our insureds’ vehicles.

Repairing vehicles today poses a

significant challenge to the collisionrepair industry as well as the insuranceindustry. Collision repair shops need tomake significant investments in train-ing to remain current with the latesttechnology and repair methodologies.We recognize that this is critically im-portant to a safe and proper repair.There are still over 40,000 shops in theU.S. How do we find the shops that arethe best trained and have invested intheir people?

The new and specialty equipmentrequired to properly repair many oftoday’s vehicle should help foster a re-duction in the number of shops in theindustry. The days of opening up ashop with a tool box and a sign infront of the building are a distant“bad” memory. The challenge is elim-inating those shops from the market-place. We don’t want our insureds’vehicles in shops that are ill-equipped.

Collision repair shops need towork closely with insurance compa-

nies and state and national regulatorsto eliminate the “haves” from the“have-nots.” Those that have theequipment and training must survivewhile those that “have-not” shouldnot. The insurance industry can’t dothis alone. We need help identifyingthe “haves.”

The industry continues to evolveand the upper class of the industry isgrowing exponentially. The middleand lower tier shops are shrinking. Itwould be our desire to increase thepace of this, with the thought that thesurviving shops would be bettertrained and equipped. The sooner weeliminate the “have-nots,” the better itwill be for everyone in the industry.

The Insider is a corporate-levelexecutive with a Top 10 auto insurerin the U.S.. Got a comment or ques-tion you’d like to see him address in afuture column? Email him at [email protected].


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Eliminating the “Have Not” Shops Will Help the “Haves”

with The Insurance InsiderInside Insurance

The Insider is a corporate-level executive with a Top 10 auto insurerin the U.S.. Got a comment or question you’d like to see him addressin a future column? Email him at [email protected]


ice shops,2) Finding the Defendants in

breach of the 1963 Federal ConsentDecree (and thereby voiding the Se-lect Service agreements), and

3) Stopping the Defendants frominterfering in the relationship betweencustomer and shop by delaying serv-ice payments or otherwise limiting theuse of rentals.

The suit alleges that State Farm’simplementation of the PartsTradersystem tortiously interferes with priorbusiness relationships that collisionrepair facilities have with their longstanding parts suppliers. (Tortious in-terference occurs when a person in-tentionally damages the plaintiff’scontractual or other existing businessrelationships.)

In addition, the suit contends thatState Farm is attempting to force thePlaintiffs to breach their legal fiduci-ary (trustworthiness) duty to their cus-tomers, ie. compromising a safe andreliable repair. “The relationship be-tween consumer and repairman hasbeen all but destroyed. The repairman

must do as instructed by the insurancecompany, not the consumer.”

Said attorney Eaves Jr., “Part-sTrader and State Farm will effectuatea ‘race to the bottom’ in quality andsafety.” And though he says the casevery likely will go to court, he is hop-ing for an out-of-court resolution.

“We would love for them not tobring it (the Parts Trader system) toMississippi. But it would be up tothem,” he said. Cheaper parts haveindeed been responsible for multipleinjuries, said Eaves Jr., who is a for-mer candidate for governor of Mis-sissippi.

“Nobody likes to be forced intofiling a lawsuit but this is the largestautomobile insurer in the country andwe have a lot of mutual customersthat will be impacted by this,” saidJohn Mosely, president of MSCRAfrom Clinton Body Shop and a plain-tiff in the suit. “We have investedtons of money in our business andState Farm telling us we have to buythrough PartsTrader system, is notthe best thing for the repair or thecustomer.”

Mosely currently participates inthe Select Service program with StateFarm.

In addition to seeking an in-junction against implementation ofthe PartsTrader system, the suitseeks a declaratory judgment thatState Farm is operating against the1963 Consent Decree, entered intoby several insurance company asso-ciations and the Federal Govern-ment, limiting insurer’s activities incollision repair to influence cus-tomers. Because of this conflict, thesuit seeks to void the Select Serviceagreements between repair facilitiesand State Farm.

Finally, the suit seeks to keepState Farm from interfering in thecontract between the customer andbody shops by “causing or implyingdelay in service payments, appraisalor limitation on the usage of rental au-tomobiles.”

State Farm is requiring use ofPartsTrader for specified shops in itsSelect Service DRP but insists usingthe service is strictly voluntary be-cause membership in Select Service isvoluntary.

State Farm’s public affairs repre-sentative Roszell Gadson said, “Re-pairers participate in Select Service®on a voluntary basis. Parts Trader is acompany that provides an electronic

parts ordering platform to repairersnationwide. State Farm guidelines forthe use of parts and part types have notchanged due to electronic parts order-ing. Estimates are written and parttypes are chosen by repairers based onconsistent guidelines,” said StateFarm’s public affairs representativeRoszell Gadson.

Barry Lewis of Ridgeland, MS,and owner of European Coachworks,says participating in the lawsuit wassimple common sense for his busi-ness.

“I’m just trying to cover us forthe future,” says Lewis, “becauseeventually it’s going to affect uswhether you’re in the program or not.”The “program” to which Lewis is re-ferring is also a company doing busi-ness as Parts Trader LLC, which wasnamed in the lawsuit as well. WhileParts Trader’s website states that therepairer has the final say in which partthey should use, the MCRA maintainsthat State Farm insists their insureddrivers receive the cheapest partsavailable in order to cut repair and re-placement costs.

State Farm neither confirmed nordenied whether parts purchasedthrough the Parts Trader service were


Continued from Cover

Suit Against PartsTrader

inferior to those the repair shops claimto use.

“There are thousands of exam-ples where inferior parts led to injury,”Eaves Jr. said, citing his considerableexperience as a trial lawyer. “ThisPartsTrader program is the first timethis has been implemented. Most ofthe cheaper parts will be made incountries where quality is not as im-

portant,” he continued.But State Farm says the suit is

without merit and that the Parts Tradersystem is not yet a reality for Missis-sippi. Preventing it from being imple-mented in Mississippi is, of course,the point of the suit.

“State Farm recently received no-tice of a lawsuit in Hinds County, Mis-sissippi, related to our electronic parts

ordering initiative and our SelectService® program. We believe the suitis without merit. We intend to vigor-ously defend the suit,” said Roszell.“The Parts Trader program has not yeteven been implemented in Missis-sippi.”

MCRA President Mosley arguesthat parts ordered from off-shore sitesare not upheld to the same standards

of safety as are American-made parts.But the PartsTrader website states un-equivocally that it does not recom-mend specific parts or manufacturers.

“Collision parts suppliers provid-ing pricing within PartsTrader must benominated by repairers like you be-fore we invite them to participate inthis market,” says the PartsTraderwebsite.


Collision repairers and their representa-tives have come up with numerous differ-ent legal theories about why insurersshouldn’t be allowed to create networks.One of them is based on the now little-known Consent Decree.

In November 1963, the U.S. JusticeDepartment settled a class action suit thatit brought against the associations repre-senting some 265 insurance companies,which resulted in their officers signing a“Federal Antitrust Consent Order,” knownas the Consent Decree. A consent decreein general is a written agreement in whicha company or organization under investi-gation by a governmental agency agree to

do or not do something in the future – with-out admitting any past wrong-doing. In thiscase it settled the class action suit withouttrial. The signers, three insurance trade as-sociations and their members agreed toforever refrain from several practices, in-cluding setting prices and steering. Theyadmitted no wrongdoing but agreed toabide by its terms in perpetuity, meaningit’s still binding on its signatories today.

The DOJ filed an action against theassociations alleging that they had formu-lated an “Independent Appraisal Plan” in1947 “to depress and control automobilematerial damage repair cost.” The heart ofthe plan was a scheme to control the work

of independent appraisers who preparedestimates of repair costs and got bodyshops to agree to them. The Govern-ment’s case focused on an insurance in-dustry invention called the CombinedClaims Committee (CCC) which was es-tablished to control collision repair prices.Basically, each CCC member-insurer se-lected one favored appraiser or appraisalfirm in each market area, to the exclusionof others, to receive all of the participat-ing insurer’s adjusting work, as long asthis adjuster worked within the guidelinesthat the CCC established and controlled.

Under the plan, committees ap-pointed by the trade groups would spon-

sor individuals or partnerships to act asappraisers in assigned territories for all as-sociation members. In return for the in-surers’ agreement to use them exclusively,the appraisers would agree to depress andcontrol repair costs by arranging (whenpossible) for shops to agree to estimatesbefore they had examined the damagedvehicles, by “establish[ing] strict labortime allowances,” and by “obtain[ing] thelowest possible hourly labor rate.” TheDOJ alleged that the plan violated theSherman Act. In November 1963 (lessthan a week after John F. Kennedy’s as-sassination) the Government’s case was

The 1963 Federal Consent Decree (www.ican2000.com/documents/1963/)

See Consent Decree, Page 29


The SEMA Show annually features aNew Products Showcase to provideexhibitors with a designated displayto highlight new product debuts,yearly updates and the latest versionsof their best sellers. All of the prod-ucts entered into the New ProductShowcase are photographed and in-clude product details and key infor-mation on how to locate and contactexhibiting manufacturers. Buyers canobtain a wealth of product informa-tion that will be relevant well into2014 by taking advantage of the freescanners available. Provided via “FreeScanner Pickup” booths locatedaround the New Products Showcase,buyers can scan all of the productsthey are interested in, while examin-ing and researching additional prod-ucts exhibitors have to offer. There isno limit to the number of scans buyerscan conduct, and the information isgathered electronically, allowing forit to be retrieved or printed immedi-ately. With new exhibitor and productinformation in hand, buyers can con-centrate on making deals and spendmore time on the Show floor con-necting with existing partners andnew suppliers. More information isavailable at www.SEMAShow.com.

Best Way to Research NewProduct at SEMA Show

Caliber Collision Centers contin-ues its aggressive expansion withthe announcement today that it hasacquired Mattocks Brothers Auto-body in Denver, CO and opened anew location in Tustin, CA.

“Today’s opening of two newCaliber locations in Colorado andCalifornia reinforces our commit-ment to add centers that providethe operational consistency, cus-tomer focus and cost managementour clients require in today’s com-petitive insurance marketplace,”said Steve Grimshaw, CEO of Cal-iber Collision Centers.

Caliber Collision’s new 13,000square foot West Denver locationopened today at 4171 MorrisonDrive, Denver, CO. Caliber’s new16,000 square foot Tustin locationalso opened today at 5 Auto CenterDrive, Tustin, CA.

“Our new Denver and Tustincenters increases Caliber Colli-sion’s locations to 132 as wecontinue to restore our customersto the rhythm of their lives inColorado and California,” addedMark Sanders, Caliber Colli-sion Centers’ Chief OperatingOfficer.

Caliber Collision Opens TwoNew Locations in CO and CA

The Automotive Service Association(ASA) has provided independent re-pairers access to a web-based advo-cacy program at the federal and statelevels for a number of years. Afterresearching various online advocacyprograms, ASA has been working toremodel its legislative and regulatorywebsite, www.TakingTheHill .com.The new website is more user-friendly and designed to move infor-mation quickly to members and topolicymakers. ASA members are en-couraged to visit the newly designedsite and sign up for free legislativealerts. “With our Washington, D.C.,office on Capitol Hill looking out forrepairers, the industry looks to ASAfor grassroots advocacy and infor-mation. Redesigning this site is onemore step in the association’s com-mitment to provide members withthe tools they need to stay informedand be heard on Capitol Hill,” saidAngie Wilson, ASA’s vice presidentof marketing and communications.The TakingTheHill.com website re-design was donated by Autoshop So-lutions, the website design andInternet marketing agency that re-cently redesigned ASA’s main web-site, www.ASAshop.org.

ASA Launches New Website,Improves Repairer Tools

Automotive instructors are invitedto attend Inside AAPEX for Auto-motive Instructors on Wednesday,Nov. 6 and Thursday, Nov. 7 at theAutomotive Aftermarket ProductsExpo (AAPEX) in Las Vegas, Nev.Attendees will learn about newtechnology, meet with manufacturerproduct managers and trainers, andearn National Automotive Techni-cians Education Foundation(NATEF) credit hours. The programfeatures education sessions offeredas part of the AAPEX LearningForum that address new technologyand timely repair issues including“Direct Injection Update,” “WalletFlushing?” “New Exhaust Tech-nologies Including the New CleanDiesel,” “Wiring Diagram ColorCoding: A Tool for UnderstandingElectrical Circuits” and “TPMSSmart Maintenance and Repair.” Allof the sessions have been approvedby NATEF for continuing educationcredit hours. Each session is ac-credited for one hour. Attendancecertificates will be available at theconclusion of each session. Instruc-tors will have access to the AAPEXshow floor to view products andtalk with manufacturers.

Automotive Instructors GetSpecial AAPEX 2013 Invite

The 4.1 percent increase in privatepassenger auto insurance rates wasthe largest by far since at least 2002,after years of 1 or 2 percent increases,or even decreases in some years, ac-cording to figures released by theOhio Department of Insurance, whichregulates insurance carriers.

Ohio is seeing bigger increasesnow to make up for years of ratesbeing too low, said Mary Bonelli,spokeswoman for the Ohio InsuranceInstitute, an industry association.

“I would suspect that in manycases, insurers had premiums thatwere so low in Ohio that they wereactually losing on their investment inauto,” Bonelli told The Plain Dealer.“There is some catch-up going on.”

Because Ohio has the third-high-est number of auto insurers in the na-tion, at 660, many companies havetried to offer rates as low as possibleto gain or keep market share, she said.“The competition has been a drivingforce and continues to be.” Indeed,during the last decade, average ratesactually dropped four years, from2004 through 2007.

The Department of Insurance,meanwhile, said that changes in autoinsurance rates stem from medical

costs, weather-related claims, thenumber of cars being driven and repaircosts. Among the five largest carriers,Nationwide Insurance had the highestincrease, at 9 percent. Progressive In-surance was next at at 5 percent. Na-tionwide has 10 percent of the market;Progressive has 13 percent.

The largest carrier in Ohio, StateFarm had a 0.4 percent decrease inrates. No. 3 Allstate had a 3 percentincrease.

Zurich Insurance had the largestincrease among the top 10, with a 26percent increase.

Since 2003, the largest overallincrease before last year was in 2009,at 2.3 percent.

Even with the 4 percent increase,that amounts to only $2 a month forthe average customer, Bonelli said.

Bonelli also noted that Ohio stillhas the ninth-lowest auto insurancepremiums, according to 2010 figures,the latest available from the NationalAssociation of Insurance Commis-sioners.

Ohio’s average premium is $619a year; the U.S. average is $791.Those figures are per insured vehicle,so they don’t include drivers of vehi-cles that are uninsured.

Ohio Auto Insurance Premiums Increased by theLargest Percentage in a Decade Last Year


On August 22nd, the Indiana AutoBody Association (IABA) held theirsecond annual golf tournament at theNoble Hawk Golf Course in Kendal-lville, IN. The event took place from3:30-7pm, to minimize the amount oftime shop owners would be awayfrom their businesses. Each four-per-son team enjoyed hot dogs, drinks and

snacks as they participated in the 9-hole scramble. Mike Hartman, Presi-dent of IABA, shared some insightsinto the event and some of the associ-ation’s other projects.

A little bit of rain on the day ofthe tournament caused a 30-minutedelay, but that didn’t stop the 52 par-ticipants who were grouped into 13four-person teams. Team Koester was

the winner of the event. This year’sevent attracted the same number of at-tendees as last year; however, morevendors sponsored the event, withthree sponsors at nearly every hole.Hartman notes “our vendors and spon-sors really came through this yearwith some great prizes,” including aflat-screen TV and a golf bag valued

at $200. The number of spon-sors allowed IABA to distrib-ute door prizes, such ast-shirts, hats and golf balls, toall participants.

Hartman enjoyed seeingbody shops gathered togetherin support of the event, min-gling with their day-to-daycompetitors and even playingon a team together. He be-

lieve it’s important to give shop own-ers a reason to “escape the daily stressof the job and interact with competi-tors, employees and paint representa-tives;” reps from PPG, Axalta, BASF,Akzo Nobel, Sherwin Williams, andothers were in attendance. He also be-lieves that events like the golf tourna-ment emphasize the personal side ofthe association, showing they do more

than just hold meetings.This year, IABA’s golf tourna-

ment raised a bit more money than lastyear, totaling a little under $3700combined in the two years the eventhas been run, but as with any suchevent, Hartman hopes to gain a littlemore each year. The proceeds fromIABA’s bi-annual convention at Lin-coln Tech is used to award two schol-arships each year in the south-centralarea of the state, and Hartman plans tomeet with local vocational schools innorthern IN soon to determine a wayto donate the proceeds from the golf

tournament to future repairers in theform of scholarships or equipment do-nations.

Hartman believes “it is imperativethat we put the money back into the in-dustry. We raise this money so we canaward scholarships to students whowant a career in the collision repair in-dustry. We all know there’s a shortageof technicians, so it’s vital that we grabthat person who is interested and helpthem so they can continue learning ourtrade.” In turn, this benefits the indus-try as a whole by providing a new gen-eration of repairers with the propertools and education to safely and ef-fectively repair vehicles.

In addition to hosting suchevents, IABA holds bi-monthly meetings for theirmembers, and 284 people areregistered for their Septem-ber meetings which will beheld in six locations acrossthe state. With new OSHAtraining coming due on De-cember 1 in IN, IABA alsoplans to host some sessionsand meetings to ensure thateveryone is current with the

new requirements.Another ongoing issue that colli-

sion repair facilities in IN are currently


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facing is insurers capping the price ofpaint and body materials on their esti-mates and even shifting items into thesublet category to avoid taxation. IABA

has taken notice and is working on theissue. Recently, Tony Passwater, Ex-ecutive Director of IABA, has attendedfield hearings hosted by the National

Federation of Independent Business(NFIB) which are also attended by staterepresentatives and senators. Passwaterhas gained interest by informing these

politicians that the state is los-ing money because the insur-ance companies persist indoing the wrong thing.Though IABA has been work-ing on this project for a yearnow, Hartman believes “wewere finally able to get withthe right group to voice ouropinions, and I really thinkwe’re getting somewhere thistime.”

IABAwww.iaba.info/Mark Hartman, President(260) 837-2802


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then abruptly change back to their oldways. I’m puzzled; as I am confidenttheir company share-holders wouldbe as well, since the insurer has oftenpaid 20 times the amounts in dispute,often paying upwards of $2,500.00 inlegal fees and costs for a dispute thatmay be under $100.00!”

“I don’t care” said Eddie Quin-tela; “it would be much easier fortheir policyholder if they just paidwhat they owe without the need forlitigation, but when they don’t, I’ll behelping my customer to have their‘day in court.’

As I see it, they [insurers] can ei-

ther pay fairly now… or pay muchmore later! “It doesn’t make a lot ofsense and even makes less ‘cents’says Quintela. “It’s no wonder insur-ance rates continue to climb and it hasabsolutely nothing to do with the costof proper repair as the insurers wouldhave people believe!”


Quintela

ASA’s Dan Risley has made ASA’sposition clear that it is against allforms of direct repair program re-quirements to use specific suppliersor products.

In a letter dated September 11to Ed Rust Jr., chairman of theboard and chief executive officer ofState Farm Mutual, Risley com-mends the U.S.’s leading private pas-senger automobile insurer for its pastdecision to eliminate its requirementto use a specific estimating platformby its direct repair shops. The asso-ciation also acknowledges StateFarm’s scoring system that promotescompetition among Select Servicerepair facilities.

However, the association comesout firmly against State Farm’s re-cent requirement to use the Part-sTrader online parts marketplace,stating it will increase a State Farmshops cycle time, negatively impact-ing customer satisfaction and in-creasing the insurance company’scosts in the long run.

The letter states, “ASA wouldlike to acknowledge State Farm asone of the first companies in thecountry to not mandate that a colli-sion repair facility utilize a specificestimating platform. For many years,several top 10 insurance carriers re-quired a specific estimating platformto participate in their direct repairprogram. In addition, State Farm wasone of the first to implement a scor-ing system that allows Select Serv-ice repair facilities to competeagainst each other in a transparentand real-time environment. Thesedecisions clearly elevated StateFarm’s position in the industry as athought leader and facilitated posi-tive change.

The letter continues, “In light ofthe recent announcement of the na-tional rollout of Parts Trader, ASA istaking a firm stance against insur-ance company mandates that limit arepairer’s right to choose their ven-dors, distributors and suppliers.”

ASA includes three suggestionsfor State Farm to consider as a start-

ASA President RisleyWrites to State Farm’sEd Rust Jr. SuggestingStopping Mandates

See ASA to State Farm, Page 27



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See Snapshot of Industry, Page 32

More details on rating system.Vendors and shops using PartsTraderrate one another using a feedback sys-tem. Shops answer five questions torate a supplier based on parts and serv-ice quality; vendors answer four ques-tions to rate shops in terms of paymentpractices, return rates, etc.

Sailer said users of the systemcan expect to spend about one minuteper day responding to feedback ratingquestions about companies withwhich they have conducted partstransactions. Participating in theanonymous feedback rating system ismandatory, he said, because a ratinggiven to a vendor by a shop, for ex-ample, is weighted based on howmuch business that shop does withthat vendor.

“If you represent 50 percent ofsomebody’s business, your feedbackhas to be worth 50 percent of their rat-ings,” Sailer said. “So as a supplier, ifa shop has only ordered from youonce, and he didn’t like you andtrashes you in the feedback, that’sonly one piece of feedback. He can’t

be 50 percent of your feedback be-cause he’s not that relevant to yourbusiness.”

Feedback is not required on everypurchase, however, and the number ofsurveys a shop or vendor must com-plete may vary day-to-day but shouldtake an average of about five minutesa week, Sailer said.

Users can request to providefeedback on a transaction even if notasked, he said.

Only a company’s star-based rat-ing is visible to users of the system,Sailer said, but any additional com-ments that are made about a shop orvendor are batched and sent to thatshop or vendor.

Bad ratings cannot be challenged,he said, but someone giving you a badreview isn’t likely to continue to dobusiness with you, so the reviewwon’t be weighted as heavily in youroverall rating as feedback from thosedoing more business with you.

Customers don’t have to wait.Select Service shops don’t have towait the half-hour to receive quotes ifa customer wants an estimate rightaway, State Farm’s George Avery said.

“There’s no problem with writingyour estimate like you do today and

giving it to them,” he said. “In theevent you’re awarded the job, you cantake that estimate and do your directbuy, or you may choose to put it outfor some quotes. But we certainly un-derstand there are times when a cus-tomer just wants an estimate.”

Buying from non-participatingvendors. Occasionally, Avery acknowl-edged, a shop may need to use a partsvendor who is not on PartsTrader, suchas when an uncommon custom wheelor flare is needed.

“If it’s a guy down the street whoyou buy from once or twice a year,just an odd part, you’re more thanwelcome to buy that part from him,”Avery said.

Because that part will be shownas not having gone through the sys-tem, it will be flagged as an order notin compliance with Select Serviceguidelines, Avery said, but local man-agement will have leeway to decidehow far from 100 percent complianceis acceptable for shops on the pro-gram.

Getting vendors on the system.The only way a vendor can partici-pate in PartsTrader is if they are“nominated” by a shop using the sys-tem. Avery said during the initial test-

ing of the system in five markets, ashop complained that a vendor fromFlorida – where PartsTrader hasn’tbeen rolled-out – showed up on thesystem. Avery reiterated that onlyshops – not State Farm nor Part-sTrader – control which vendors areon the system.

“It turns out a repairer (on thesystem in another state) had a rela-tionship with that vendor in Florida,”Avery said.

If a shop nominates a vendor,then is unhappy with that vendor, canthe nomination be rescinded? Sailersaid no.

“Two reasons: First, the odds arepretty darn good that someone elsenominated them as well,” Sailer said.“And let’s say no one else did, butsomebody else started using them.The last thing I’m going to do is say tomy users, ‘Well, because Joe doesn’twant to do business with that vendor,you can’t do business with them ei-ther.’ We’re not going to take awayyour choice if they’re already onthere. But no one will make you dobusiness with them.”

Not part of a Select Servicereduction. Some shops in several


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More on PartsTrader

See More on PartsTrader, Page 27


Three years after an emotional run atIndianapolis Motor Speedway, Indy-Car Series star Dario Franchitti hasbeen selected by The Henry Ford toonce again drive one of Jim Clark’smost famous race vehicles in the 2013edition of the Goodwood Revival inEngland, September 13-15.

The popular Scottish driver andthree-time Indianapolis 500 winner,was previously chosen to drive thishistoric car in 2010 when it returnedto the Indy track for the first timesince Clark drove the car to victorythere in 1965.That victory, the first fora rear-engine car, and the first Indywin for Ford Motor Company, helpedchanged the sport of IndyCar forever.

“We are thrilled that Dario ac-cepted the offer to drive the Lotus atGoodwood,” said Christian Overland,executive vice president of The HenryFord. “We know how much the carmeans to him, and also how much thechance to help honor his hero JimClark means to him and his family.”

“The drive at Indy was a high-light of my life,” said Franchitti, whocurrently drives for Target Chip

Ganassi Racing. “I’ve won the Indy500 three times, but to drive that carthere that day was something very,very special. Back in 1965, that carwas cutting edge technology. It stillfeels very sharp and is bloody quick,especially in a straight line. You open

up the four-cam Ford and hear thatglorious noise, it’s just incredible. Iwas driving the car that day in Indyvery much below its capability be-cause it is a one-off, special piece ofhistory. The drive that day was a verypersonal thing for me.”

In 1965, the Lotus-Ford, drivenby Scottish-born Formula One star

Jim Clark, won the Indianapolis500. The Henry Ford acquired thecar in 1977 and in 2009, the Fordengine was removed from the vehi-cle and shipped to Indianapolis,where conservation work began atRace Car Restorations, Inc. The

chassis was restored byClassic Team Lotus runby Clive Chapman, son ofColin Chapman, founderof Lotus.

The creation of theLotus-Ford stands as anexcellent example of inno-vation and collaboration.Lotus and Ford MotorCompany were ultimatelybrought together in theearly 1960s by legendary

American road-racer Dan Gurney. Atthat time, Gurney thought that thesleek, front-engine American Indi-anapolis race cars could be defeatedby proper application of rear-engine,European Formula One technology.He introduced Ford engineers toColin Chapman, founder of Lotus andone of the world’s most innovative

race car builders. The result was alightweight, aircraft-inspired Lotuschassis, with four-wheel independentsuspension and powerful rear-mounted Ford V8 engine. The Lotus-Ford effectively killed the traditionalIndy car and established a new para-digm for American race cars.

“The drive this weekend atGoodwood will be about demonstrat-ing the car for all those fans of Jimmy,and I am excited about doing it,” saidFranchitti, currently seventh in the In-dyCar Series standings with two racesleft. “Goodwood is a fast, fast trackthat hasn’t changed much since backin the day, so I’ll be taking it veryeasy. It’s a demonstration run with abunch of cars that were very importantto Jimmy’s life and his career. I can’ttell you how privileged I feel to beable to do this.”

Franchitti will take the Lotus38/1 on the course during the JimClark Tribute Parade throughout theweekend. The Lotus-Ford 38/1 Indycar will be on display all weekend atGoodwood in the paddock area of theevent.


Franchitti Reunites with The Henry Ford and the Jim Clark Lotus-Ford 38/1 IndianapolisWinner as Part of Clark Tribute at 2013 Goodwood Revival

markets have dropped out of the Se-lect Service program rather than usePartsTrader. But Avery said the pro-gram is not part of any plan to re-duce the number of shops on theprogram or shift work toward largeMSOs.

“That could happen, but this isnot an effort to drive the number ofSelect Service repairers we have,”Avery said.

He also noted that more than 50percent of Select Service shops are in-dependent single-location businesses,a higher percentage than any otherlarge insurer’s program.

“That’s not a signal to me thatI’m trying to dump the independents,”Avery said. “They are great businesspartners.”

Lawsuit filed. PartsTrader hasn’trolled into Mississippi yet, but repair-ers and parts vendors there have al-ready filed suit in an effort to preventshops from having to use it. The Mis-sissippi Collision Repair Associationand more than two dozen body shops,dealers and other parts suppliers al-

lege in the suit, filed in Hinds CountyChancery Court, that State Farm’s im-plementation of PartsTrader tortiouslyinterferes with existing business rela-tionships that shops have with theirparts vendors.

In addition to an injunction halt-ing State Farm’s implementation ofPartsTrader, the suit seeks a rulingthat State Farm is violating the termsof the 1963 Consent Decree, whichplaced limits on more than 260 in-surer’s activities related to auto in-surance and claims. The suit alsoseeks to prevent State Farm from in-terfering in the relationship betweena shop and its customers by delayingpayments or appraisals, or by placinglimitations on the use of rental vehi-cles.

State Farm said the case is with-out merit and that it will vigorouslydefend against it. See related story thisissue.

John Yoswick, a freelance writerbased in Portland, Oregon, who hasbeen writing about the automotive in-dustry since 1988, is also the editor of theweekly CRASH Network (for a free 4-week trial subscription, visit www.Crash-Network.com). He can be contacted byemail at jyoswick@ SpiritOne.com.


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More on PartsTrader

ing point to address the industry’sconcerns.● Immediately eliminate mandatesrequiring collision repair facilitiesto purchase or source parts using aspecific third-party vendor.● Encourage the use of these typesof programs on a voluntary basiswith a financial incentive.● Heavily weight your scoring sys-tem to reward repair facilities thatare leading their respective mar-kets in parts cost, alternative partsusage, length of rental and cycletime. All of which are key opera-tional metrics that drive overall re-pair costs.

The letter concludes, “Hope-fully, our suggestions are viewedas a sincere outreach to devise asolution that is amicable and bene-ficial to all the industry stakehold-ers including, but not limited to,State Farm, collision repairers,parts dealerships, parts vendors, e-commerce technology providersand, most of all, our customers.”

The complete text of the let-ter can be read and downloaded atwww.autobodynews.com.


ASA to State FarmRuss Darrow Used Car Superstoreopened Sept. 16 at 2800 RamadaWay in Ashwaubenon, WI. Thedealership carries 150 pre-ownedvehicles and has access to more than1,000 vehicles within the Russ Dar-row Group.

The Russ Darrow Group isWisconsin's all time #1 vehicle re-tailer. It started as a Chrysler deal-ership in 1965 and has grown to 15dealership locations offering Honda,Nissan, Toyota, Chrysler, Dodge,Jeep, RAM, Kia, Mazda, Mitsubishiand Scion.

The building was previouslyhome to a Bergstrom AutomotiveSaturn dealership.

The superstore includes a full-service maintenance and repair fa-cility. Body work will be managedby Russ Darrow Group’s CollisionRepair Center in Appleton.

Paul McDonald is the generalmanager, overseeing 25 employees.

A grand opening is planned forthe fall. The website is russdar-row.com. Russ Darrow Group,headquartered in Menomonee Falls,owns dealerships in nine Wisconsinmarkets and has more than 600 em-ployees.

Russ Darrow OpensNew Superstore in WI

During the weekend of September 6-8, AASP/MO held their 32nd annualEXCEL Trade Show at the St. Charles

Convention Center in St. Charles,MO. Executive Director, Ron Reil-ing, was pleased with this year’sevent, noting that it went exception-ally well.

The EXCEL Trade Show, whichis open to anyone involved in the col-lision repair industry, featured aplethora of training classes on busi-ness management and technology, in-cluding several I-CAR classes. Over200 participants registered for thetraining sessions, leaving over 150

more attendees who registered onlyfor the exposition portion of the event.Excluded from the count are attendeeswho did not register.

Reiling notes that two of I-CAR’scourses sold out with 50 attendees ineach session; both their blueprintingclass and their aluminum seminarwere well attended, and participantsseemed to gain much needed knowl-edge that will assist them in their dailyrepairs.

This year, AASP-MO gave outtwo awards at the EXCEL Trade Show.The award for Outstanding Member of

the Year was given to Tom Barrows ofHi Tech Automotive in Cape Gi-

rardeau, MO, and after 65 years inbusiness, Fritz Aljets of Aljets Auto-motive in Dorsey, IL received the Life-time Membership Award.

Though this year’s event wascomparable to the past three years’events, Reiling admits “we alwayswant more participation from the in-dustry.” He explains that whenEXCEL first began, there were limitedoptions for acquiring training, so thatwas a big part of what the event pro-vided for their members. Now thattraining options are more plentiful,AASP-MO “tries to provide trainingthat our members cannot get else-where. We have quality instructors toteach our seminars, plus it gives at-tendees a chance to spend time withother professionals in the industry.”

Reiling believes that these type ofevents are important to members be-cause it allows them to stay on top ofwhat’s going on. The EXCEL TradeShow features training on new technol-ogy, plus attendees are able to see newproducts and equipment which is show-cased on the exposition floor. Reilingnotes, “our industry is a constant targetfor training. With so many new vehicles

and requirements being released, shopowners have to keep an eye on training.”

Furthermore, the training offeredat such events benefits the entire in-dustry because “better trained techni-cians make better choices andsharpening their skills leads to betterrun businesses which improve cus-tomers’ perceptions of our industry.”

AASP-MO also continues to stayinvolved with issues their membersface on a regular basis. In their recentmeetings, topics of discussion in-cluded PartsTrader and what Oba-macare means for small independentbusiness owners.


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dismissed, pursuant to an agreed orderunder which the defendant associationswere enjoined from pursuing any programthat had the purpose or effect of “exercis-ing any control over the activities of anyappraiser.”

The Independent Appraisal Plan hasnever been revived, nor has any programor practice which favors chosen damageappraisers or excludes others.

In the words of Silvie Licitra, well-respected collision industry writer and acollision repairer at the time, resultant pay-offs and corruption were rampant becausethe selected appraiser fixed the labor rates,required arbitrary discounts on parts, andheld firm to the labor times published in aguide. These appraisers also had shopswith which they had unwritten agreementsthat their estimates would be accepted,sight unseen. “Those appraisers all hadtheir hands out and if you didn’t pay themoff, they’d write lousy estimates (creating)a take-it-or-leave-it situation, the shopbeing faced with losing the job if they did-n’t play ball (with insurers).”

Frank Stepanek, chairman of theNational Body Shop Committee of the In-dependent Garage Owners (IGO) of Amer-ica (precursor to the Automotive ServiceAssociation), was quoted in a November1963 industry publication: “It’s no longerlegal for many insurance companies to de-mand discounts, set the hourly rates, boy-cott repair shops [and] use specificappraisers.”

A number of trade associations weretargeted in the years following the signingof the Consent Decree. In March of 1964,Allstate Insurance Company filed suitagainst 109 members of the Central JerseyAuto Body Association (CJABA), chargingthem with antitrust violations, conspiracyand price fixing. In July of that year, a judgeordered the association members to sign aconsent decree of their own. The embit-tered members reluctantly settled with All-state, citing lack of funds to finance aprotracted legal battle with the company.

In support of the CJABA, an associa-tion of central New York body shop ownersset up a legal defense fund for the CJABA.

Their spokesman was quoted as saying:“It’s with deep regret that this spirit was notnationwide. I strongly urge every body shopor garageman who looks forward to free-dom in his business to alert himself andseek remedies that will maintain our rightsand freedoms in the industry.”

The legal wrangling went back andforth until the summer of 1967, when acongressional committee called for an in-vestigation into the auto insurance busi-ness. U.S. Sen. Philip Hart of Michiganproposed federal oversight of the indus-try and an amendment to the 1945 Mc-Carran-Ferguson Act as a way to curbinsurance domination of the collision re-pair industry. McCarran-Ferguson effec-tively shielded the insurance industryfrom federal antitrust laws by grantingstates the primary responsibility for regu-lating insurance. Sen. Warren Magnuson,chairman of the Senate Commerce Com-mittee, made additional calls for inves-tigative probes and even threatened tolaunch an independent investigation by aspecial counsel.

Between congressional pressuresand Transportation Secretary Don Boyd’sinsistence the matter be studied by his de-partment, the White House was promptedto step in. In a message to Congress inearly 1968, President Lyndon Johnsoncalled for a thorough investigation into theauto insurance business.

“The Consent Decree was like a Band-Aid,” said Dick Hogg, a suburban Philadel-phia body shop owner who remembered the‘63 action, as well as the business condi-tions that led to its signing. Hogg also re-members that its signing didn’t usher in agolden age for body shops. “It only gave ustemporary relief because like some otherlaws, there was no enforcement. The termsof the Consent Decree were diluted by thestate regulations that are, for the most part,unenforced. The insurance departmentsgive the benefit of the doubt to the insurers.”

Since insurance companies hedgedtheir bets with their chosen appraisal firm,they had control. No auto damage claimswere settled unless they passed through

The 1963 Federal Consent Decree (continued from p. 15)

See Consent Decree, Page 34

by Chasidy Rae Sisk

Anyone who has been involved withthe collision repair industry for anyamount of time knows how frustratingit can be when insurers refuse to paythe full amount billed for a repair.Many repairers count their losses andmove on to the next vehicle, butMark Schaech Jr., co-owner ofMark’s Body Shop in Baltimore, MD,refuses to take this insult lying down.While he and his partner, his father,would prefer to avoid the necessity oftaking legal action, he’s definitely“not taking it anymore!” Schaechknows this is a common problem thatshop owners face, so he’s glad to sharehis experience and advice with colli-sion repairers across the nation.

In May 2013, Schaech won hisfirst short-pay lawsuit against GEICOfor $392.95. Since then, Schaech wona case against State Farm when the in-surer filed a replevin lawsuit (replevinis a legal remedy for a person to re-cover goods unlawfully withheld fromhis or her possession) against him,claiming his charges for storage wereunreasonable and not competitive

within the market area. Mark’s BodyShop was holding a car while await-ing payment, but when State Farm set-tled with the car’s owner and tooktitle, they refused to pay Schaech. Therepair contract was the deciding fac-

tor in Schaech’s victory, playing ahuge role “like it does in any othercase,” according to Schaech, whoadded that “it is so important that yourdocuments are in line.” In addition tobeing paid the full amount owed,Schaech was also reimbursed for hisattorney’s fees. He feels the victorywas very important since a loss wouldhave given State Farm, and possiblyother insurers, precedent for refusal topay on total losses.

Schaech credits the CCRE (Coali-tion for Collision Repair Excellence)for his knowledge of such legal actions,noting that “the first time I heard of ashop taking control of their businesswas at a CCRE meeting.” He followedthat up by hiring an industry consult-ant, Barrett Smith, of Auto DamageExperts and a good Maryland attorney,Anthony DiPaula to support his ef-forts to take control of his own busi-ness. He is also grateful to all of the“attorneys fighting a successful fight.”His next case involved an assignmentof proceeds, ammunition he obtainedfrom industry lawyer Erica Evers-man, but it doesn’t stop there! Schaechis currently pursuing numerous law-suits, including one involving an olderclaim of two short-pays from GEICOand a similar suit against State Farm.

The lawsuits that Schaech is cur-rently pursuing are older claims sincehe has not had any recent problemswith GEICO, which he attributes tohis successful case in May. Most in-surers are paying his operation costs,though labor rates with insurers refus-ing to pay his full labor rate continueto be a problem. The one exception he

notes is State Farm who always leavesa short-pay, but for now, the customersare paying the difference. Schaech isnot taking any additional assignmentsof proceeds at this time as he has sev-eral in progress.

Schaech notes, “I would say that90% of the time, insurers in our marketrefuse to reimburse our customer fortheir entire repair bill. These short paysare for reasonable and necessary ratesand procedures required to repair ourcustomers’ vehicles to pre-loss condi-tion to the best of human ability. Itseems that the larger the carrier, theworse the behavior. It seems like asopposed to fairly paying claims, thesecarriers would prefer to spend thosedollars on advertising campaigns.”

Regarding what may cause him tohesitate before filing a lawsuit, Schaechadmits that it can be expensive andtime-consuming to sue an insurancecarrier, especially when the short-paysare small amounts, but one way to com-bat that is to pile several claims into onecase, making it more efficient. His ul-timate goal is to handle these cases onhis own; as he attends the trials, he iseducating himself via his attorney in


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MD Shop Owners Prevail Against Short Pays—No DRP, No Problem

Mark Schaech Sr. with his son Mark, Jr.

hopes of being able to handle futuresuits in small claims court on his own.“All I will have to spend is time whichI’m more than willing to do in order toensure my customers are being takencare of,” Schaech notes.

The short-pay lawsuit in Maywas the first that Schaech actually pur-sued to trial. Because these types ofcases are new to the Maryland courtsystem, “it takes a bit of educating thecourts that we are contracted by ourcustomers to provide a proper and saferepair and do not have any contractwith any insurance companies. Butthe misconception is that, because theinsurance company is paying the bill,they have a right to inject themselvesinto the repair process when this issimply not the case. Because we arethe experts, we carry all of the liabil-ity associated with the repair. We arethe ones who have to provide a war-ranty to our customers and stand be-hind the repairs. We are the ones whoknow our cost of doing business.Therefore, only a shop can know whatto charge for a given repair. The dutyof the insurance company, by contract,is to make the customer whole, not tocontrol the price or dictate the repairmethodology, all while not sharing in

the liability for those repairs.”Though most insurance compa-

nies insist that they don’t pay for cer-tain operations or that a shop isovercharging, Schaech insists, “thecollision repair community knows thatthese are word tracks that insuranceadjusters have been trained to use foryears, and in most cases, these carri-ers do pay for that, and the shops thatare asking to be compensated are notthe only ones asking for these opera-tions and rates.”

Schaech was happy when thejudge ruled in his favor: “It felt goodthat the Judge got it. I also feel confi-dent that the courts will continue to findin our favor as courts are in many otherstates all over the country. It takes aclose look at the law and the insurancepolicies to realize that determining thecost of repairs and the repair methodol-ogy is not the business of insurance. Inmany policies, the insurance companyhas the option to take the customer’s ve-hicle and repair it themselves, but ifthey chose that option, they would haveto accept all of the liability that goesalong with the repair which is why theydo not select that option.”

As a proud member of CCRE andSCRS, Schaech strongly encourages

other collision repair experts to stand upfor their rights. “I would encourageother shop owners to know their statelaws and get a good attorney to workwith. There are many shop ownersacross the country who have beenforced to go legal, and these repairershave been an inspiration and have al-ways made time to answer my questionsand lend advice. There is unbelievablesupport available to those who want tolearn.” Schaech’s desire to become moreinvolved has also led him to become in-volved with the Washington Metropoli-tan Auto Body Association (WMABA)where he sits on the Board of Directors.

Schaech also assures other shopowners that the trial itself was not verydifficult. “It was easy for us to explainwho the expert repair professional isand who decides what the Final Billshould be, and the judge agreed thatbecause GEICO doesn’t know ourcosts, they cannot possibly determinewhat we are able to charge.”

It is also important to note thatSchaech’s lawsuit has not really af-fected his relationship with GEICO orany other insurers. His problem isn’twith the individuals that he deals withbut the company’s policies on han-dling claims.

Schaech also takes issue with hisstate’s laws regarding insurance com-panies breaching contracts and howthis affects consumers’ rights.

“If a Maryland Insurance Com-pany breaches their contract with thepolicy holder, and the consumer wantsto hold them accountable in a court oflaw, the consumer is not able to recoverattorney’s fees in our state. This reallyinhibits consumers from taking action,even when it is obvious that they are inthe right… I wish the carrier wouldspend some of those billions of dollarsthey spend on marketing to properlycompensate consumers for quality andsafe repairs. I see a lot of poor repairsthat have been completed in shops whowere not properly compensated for re-pairs, and this is a consumer problem,especially as it relates to consumers’safety and the value of their vehicles.”

When asked what measuresshould be enforced to prevent the ne-cessity of short-pay lawsuits, Schaechnotes, “If insurers would get back tothe business of insurance, selling poli-cies and paying claims, and stay out ofthe collision business, we would nothave to go this route. The reality isthat, by law, consumers have the right


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See MD Short Pays, Page 34



Snapshot of Industry


to choose the body shop that they feelwill do the best job, and by contract,the insurance company is supposed toindemnify the policy holder whenthere is a loss. So, I say ‘just pay thebill Mr. Insurance Company.’”

In 1975, Schaech’s father openedMark’s Body Shop in a two-baygarage. After six years of refinishingcars through high school and college,Schaech managed the family businessfrom 1999–2002 when they movedinto their current 17,000 square footfacility. At that point, Schaech Jr. be-came his father’s partner.

Though Mark’s Body Shop re-pairs approximately 1000 cars annu-ally, grossing around $3 million insales, they do not participate in anyDRPs, but that wasn’t always thecase. “There was a time when we par-ticipated in as many as five DRP pro-grams, but over the years, theseprograms developed into bargainbasement repair programs. We wereasked to use more aftermarket andjunk yard parts which we find to be alower quality alternative to new OEM

parts. We were instructed to utilize re-manufactured wheel and junkyardsuspension components which we be-lieve to put our customers in harm’sway. Finally, we were asked to workso cheaply that it became difficult toinvest in new equipment and trainingwhich is imperative to repair today’smodern vehicles.”

To shops that are currently facingdifficulties obtaining full payment on re-pairs, Schaech offers the following ad-vice: “There are numerous organizationsand individuals in our industry who re-ally care about consumers and repair fa-cilities. These leaders are only a phonecall or email way and willing to providesound advice when a shop owner or con-sumer needs some sound advice.”

“The reality is not all shops arethe same; we all have different costs,different levels of quality, differentequipment and training, different cer-tifications, and different fixed costs. Itjust doesn’t make sense that we can allwork for the same price.”

Mark’s Body Shop4025 Mortimer Ave.Baltimore, MD 21215410-358-5155www.marksbodyshop.com


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MD Short PaysThe Plan’s sieve, and as you might ex-pect, the dollars that passed throughwere only those deemed allowable by theinsurance industry at large. The typicallabor rate for collision repair was be-tween $5 and $6 per hour.

Essentially, the selected appraiserfixed the labor rates, required arbitrarydiscounts on parts and held firm to thelabor times published in a guide. In addi-tion, the appraiser had shops with whichone had unwritten agreements to accepttheir estimates sight unseen. Accordingto Silvie Licitra, a well-known collision in-dustry writer whose experience datesfrom that era, payoffs and corruptionwere rampant at that time.

“It was a real crazy business backthen,” wroteLicitra. “Those appraisers allhad their hands out, and they were takingmoney like crazy. If you didn’t pay themoff, they’d write lousy estimates. It was atake it or leave it situation because abody shop was faced with losing the jobif they didn’t play ball.”

In question, however, is the specificityof the Consent Decree to individual insur-

ance companies today. The Decree wassigned by representatives of the three majorinsurance associations at the time: Associ-ation of Casualty and Surety Companies(ACSC); American Mutual Insurance Al-liance (AMIA); and National Association ofMutual Casualty Companies (NAMCC), allof which are now defunct.

Also, despite their seniority in busi-ness the majority of the dominant compa-nies today are not on the list of signatoriesso represented. State Farm (1922), Farm-ers (1928) and GEICO (1936) do not, forexample, appear on the list of companiesrepresented.

In addition, communication fromthe DOJ’s Antitrust Division claims thatthe consent decree cannot be enforcedagainst individual insurance companies,since the companies themselves werenot signatories to the decree.

Read the 1963 Consent Decreeht tp : / /www. ican2000.com/docu-ments/1963/

Content herein draws upon articlespublished by Charlie Barone and JohnYoswick.

The 1963 Federal Consent Decree (from p. 29)


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The cost of buying and operating acar varies from state to state and youmight be surprised to learn whichstate is the most expensive.

Driving in Georgia will take abite out of your pocketbook. A newsurvey by BankRate.com has foundthat Georgia is the most expensivestate in the U.S. to operate a motorvehicle, followed by California.Oregon is said to be the most af-fordable for those hitting the roadseveryday.

The cost of gas, insurance, re-pairs, taxes and fees are all factoredinto what it costs Georgia residentsan average of more than $4,000 pervehicle per year.

Residents of Oregon benefitfrom the lack of a state sales tax, lowauto insurance and the fact that theydrive 16-percent fewer miles thanthe national average. Those factorsland the state on the bottom of thelist at $2,204 annually.

The national average for oper-ating a car is $3,201 according to thesurvey.

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As an advocate of the ‘It Can Wait’movement, the National Auto BodyCouncil issued a call for its membersand others in the collision industryto join the nationwide effort to curbtexting and driving on Drive 4Pledges Day, September 19. Drive 4Pledges Day is a national day of ac-tion that aims to have every drivermake a personal commitment tonever text and drive and to also re-cruit others to do the same. TheNABC is urging drivers to make thepledge online at go-att.us/NABC, adedicated link created by AT&Tspecifically for the National AutoBody Council’s efforts. The cam-paign is a collaborative effort be-tween major wireless carriers AT&T,Verizon, Sprint and T-Mobile. Aspart of the nationwide Drive 4Pledges Day, NABC member com-panies will be implementing a vari-ety of promotional events to educateemployees and the public—particu-larly teens—about the dangers oftexting while driving. While textingis by far the biggest distraction onthe road, NABC notes that any dis-traction is dangerous, includingphone calls, reading e-mails, eating,changing CDs, fixing makeup, etc.

NABC Partners with ATT onAnti-Texting Campaign

According to the latest data from theU.S. Department of Labor Bureau ofLabor Statistics (BLS), the total pro-duction for the auto body repair in-dustry rose in June after declines inboth April and May. The total aver-age weekly production in June in-creased to 6.59 million man hours.The industry’s total production,which we define as the total averageweekly hours by month multiplied bythe total number of production andnon-supervisory workers employedeach month, closed June, 2013 at6.59 million man hours. This repre-sents an increase. from the 6.5 mil-lion man hours reported in May.Production hours in June 2013 stoodat 1.4 percent above 2012. The de-cline came chiefly from an increasein average hours worked each weekby production employees, up to 38.7hours in June from 37.4 hours inMay. The number of production andnon-supervisory employees actuallydeclined in June to 170,300 from173,800 in May. Added together, theaverage weekly production over thepast twelve months now totals 78.96million man hours. That is 3.5 per-cent higher than the 12 month total ayear ago.

BLS Says Collision IndustryProduction Rose in June

Daimler plans to start selling a self-driving car by 2020 to help its Mer-cedes-Benz brand regain the topspot among premium carmakers, de-velopment chief Thomas Webersaid. “We want to be the first tolaunch autonomous functions in pro-duction vehicles. You can be sure wewill accomplish that in this decade,”Weber said. Carmakers and suppli-ers are working on ways to makedriving safer and more comfortablethrough automation and the race ison to bring the technology to themass market. Daimler is focusing onso-called highly automated driving,in which cars master situations suchas cruising the highway or maneu-vering through traffic jams while thedriver relaxes. The car would recog-nize difficult situations such as deal-ing with traffic lights or urbandriving among pedestrians and cy-clists, and hand control back to thehuman behind the wheel. Daimler isnot alone in its ambitions. Nissan,for example, has also announcedplans to launch a car completelyguided by computers this decade.The technology was shown at theFrankfurt auto show, with produc-tion estimate to take 10 to 15 years.

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Even thought the Internet is continu-ing to explode and cable TV advertis-ing is flourishing, radio is still aliveand well and more body shops areusing it, according to people whoknow—such as: advertising agencies,media buying companies radio sta-tions and body shops themselves.

According to Kantar Media,there are nearly 5,000 AM stations androughly 9,000 FM stations in thiscountry and last year radio advertisingdollars increased by 8 percent at thenational level and 3 percent locally.While the collision industry is alwayslooking for new forms of advertisingand marketing, the word out on thestreet is that good old broadcast radiois still a viable form for body shops,both MSOs and independents.

Phil D’Angelo is a sales managerfor three radio stations in northernCalifornia (KUIC, KKIQ and KKDV)and has seen how radio advertisinghas worked well for body shops in his

regions. “We currently have five bodyshops advertising on KUIC in Vacav-ille, CA, and they’re happy with theresults,” D’Angelo said.

“Radio is more popular now, be-cause it offers so many options forcompanies of all sizes. For regionalcompanies, you’re going to get morebang for your buck with radio, as op-posed to other forms of advertising ormarketing. People wake up in themorning with the radio; drive to workwith the radio and listen to the radioall day at work, so radio travels every-where and some people listen to it8–10 hours and more every day. Also,we’ve discovered that the Internet andbroadcast radio work hand-in-hand,because radio creates demand and theInternet fulfills that demand. If theyhear you on the radio and then see youonline, there’s a good chance you’llget them as a customer.”D’Angelo had to learn the collisiongame in order to better serve his body

shop clients, he explained. “When westarted working with body shops, wediscovered that their business modelis unique, because from what they’vetold us, 80% of all the work comesthrough the insurance companies. So,the advertising we’ve designed forthem conveys a specific message, butbranding is also a big part of it. Wewant the body shop’s name to be inthe listener’s head.

In the radio business, we call itthe consumer’s ‘top-of-mind aware-ness,’ and it’s very important in thecollision repair industry, because get-ting your car fixed is not an impulsebuy. So, when people do get in an ac-cident, they’ve already heard theshop’s name over and over on one ofour stations and that’s who they willmention it to their insurance agent.”

Chuck Jessen is the owner ofPreFab Ads in San Francisco, a com-pany that licenses professionally-pro-duced TV spots to body shops on an

exclusive-by-market basis. Thesecommercials have appeared on 260local television markets throughoutthe country and several have won in-ternational advertising awards andhave been featured on such nationalTV programs as “Reel TV” and“World’s Funniest.”

Jessen is currently producing aseries of radio ads to add to his menuof offerings, because his clients areasking more and more for 30 and 60-second spots they want to air on localstations. “Some body shops areswitching from TV to radio, so thatthey can target their customers morespecifically,” Jessen said.

“In the bigger markets, the costof TV advertising is prohibitive formany independent body shops withmodest advertising budgets. If you’repaying to advertise to a certain marketand a large majority of it is out of yourarea, it doesn’t make sense for any re-gional business to advertise outside


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Is Radio Advertising a Sound Decision For Body Shops?

with Ed Attanasio

Social Media for Shops

Ed Attanasio is an automotive journalist based inSan Francisco, California. He can be reached [email protected].

that area. With radio, body shops canget more saturation and coverage insmaller to mid-size markets, so it’sideal for body shops that draw cus-tomers from no more than 10 milesaway.”

Radio has a captive audience andJessen knows from his 30 years of ex-perience what types of radio ads willwork in any market, he said. “Peopleare in their cars a lot and commutersaren’t going away any time soon.We’re producing several differenttypes of radio ad, including humorousand instructional. With our TV ads, wealready know humor works and com-munity service type themes are alwayswell-suited for the collision industry.We produced a radio ad that conveysan anti-texting message and it getsgood reviews, because it’s a warm andfuzzy type of ad that listeners will finduseful.”

Sharon Wicks is the president ofSilicon Valley Media Consulting inSan Jose, CA and has seen a recentspike in her clients’ interest in buyingmore radio advertising time, she said.“Radio is thriving, because it justmakes sense for regional businessesthat can’t afford a heavy television ad-vertising schedule. Radio has gone

full circle and now it’s back in a bigway, especially for companies thatvalue a highly targeted approach.”

Wicks has seen more and more ofher clients asking about Pandora In-ternet Radio, an automated music rec-ommendation service that playsmusical selections of a certain genrebased on the user’s artist selections.The user then provides positive ornegative feedback for songs chosen bythe service, which are taken into ac-count when Pandora selects futuresongs.

“Advertisers like Pandora, be-cause it is more targeted than conven-tional radio,” Wicks said. “Pandorahas specific demographic informationabout every one of its users, so you’regetting exactly who you want to reach.When your ad runs, it appears in apop-up banner-type ad with audio thatcan be either 15 or 30 seconds inlength. Either way, it’s less invasivethan a 60-second radio ad and ofcourse, it’s paired with a visual, whichgives it more impact.”

Rich Villanueva is the marketingmanager at Michael J’s Body Shop,Inc., with three very busy locations inSan Jose, CA. After much planningand research, Villanueva decided that

radio was the best plan for this bur-geoning regional MSO, for severalreasons.

“We found a local FM station(KEZR) that offered a package wewere very comfortable with, so wehired an advertising agency (Kilburg& Associates) that does ads for theSan Jose Sharks NHL hockey team,”Villanueva said. “We decided to gowith humorous ads and almost imme-diately we received a lot of positivefeedback. We’re basically doingbranding with these radio spots, ratherthan doing promotions. Since this isour first radio schedule, we want toget the name out there and connect thedots with our audience.”

Michael J’s had their agency pro-duce seven different ads to run in ro-tation on KEZR and is now going tocreate more ads to leverage the factthat one of their owners is a woman.“We’re targeting women with thesenew commercials, because they repre-sent a large portion of our customerbase,” Villanueva said. “Jamie Ryan isone of our co-owners and she’s a greatspokesperson for what we’re trying todo. In these ads, we position her as anexpert and an advocate, especially forour female market. The message is we

will treat our customers well from be-ginning to end, by providing themwith a stress-free, non-threatening en-vironment when they bring their car toMichael J’s.”


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Sherwin-Williams Automotive Fin-ishes A-Plus™ Network and Vehi-cleOwnersGuide.com, an onlineprovider of blueprint documents thathelp collision repair shops identifyany missed revenues, are providingaccess to the provider’s OpenClaims Gateway™, a full featureclaims portal that includes claimsworkflow, dispatching, estimate re-view, vendor e-Coupons, consumertranslations and analytics. The newdispatching system is already popu-lated with the A-Plus Network’sleading collision repair facilities andwill provide a turnkey repair net-work for insurance companiesthroughout the U.S. and Canada.The Open Claims Gateway portalwill dispatch cars to A-Plus shops,and then these facilities and insur-ance companies can use the systemto manage the claims. “Open ClaimsGateway will be provided free ofcharge to A-Plus Network facilities,and there is no contract to sign. SaysTroy Neuerburg, Director of SalesExcellence at Sherwin-Williams Au-tomotive Finishes, “This system of-fers numerous benefits.” Forinformation call call 1-800-SWUL-TRA (1-800-798-5872).

The Opening General Session, spon-sored by Axalta Coating Systems,will now offer two concurrent ses-sions, one for Collision, one for Me-chanical, that will combine the bestcomponents of a keynote presenta-tion with the industry-specific focusof a forum. The forum’s headliningguest speaker will be Mike Ander-son. Admission to the new OpeningGeneral Session/Industry Forums areincluded in all registrations, and allattendees are invited to attend.

“Vastly different from pastyears, we’ve completely redesignedthe Opening General Session and at-tendees can expect a much differentexperience. Mike Anderson is ex-tremely well-respected, and atten-dees are going to want to hear hismessage,” says Dan Risley, ASApresident. “The format of this keyevent also aligns with our mission tocreate exceptional value for our au-dience and provide invaluable net-working opportunities for theindustry and by the industry.”

“Axalta Coating Systems is ho-noured to sponsor this year’s Open-ing General Session,” said MikeBennett, North America marketingdirector, Axalta Coating Systems.

ASRW’s New Format Will Be‘Vastly Different Experience’

Mitchell has announced the generalavailability of RepairCenter™ Rep-utation Manager. The new packageoffering combines real-time text andemail updates with advanced cus-tomer insights from satisfaction sur-veys and social media data toimprove the repair shop and vehicleowner processes. The tool shouldhelp increase repeat business and re-ferrals by providing actionable in-sight into the customer experience.By adding online customer satisfac-tion surveys and incorporating com-prehensive reporting and analyticstechnology, repair shops can betteridentify steps during the repairprocess that can be improved. “Cus-tomer retention and business growthgo hand-in-hand, but until recently,repair shops haven’t had the breadthof automated tools needed to im-prove upon the customer experi-ence,” said Anlin Sethi, SeniorManager of Product Management,Auto Physical Damage solutions.“By incorporating real-time interac-tion and engagement, alongside ro-bust survey analytics, ReputationManager allows repair shops to im-prove their reputation and buildstronger customer bases.”

Mitchell Announces its NewReputation Manager Package

ABRA Auto Body & Glass helpedto raise more than $30,000 duringthe first annual Bent Creek CharityGolf Tournament to benefit Help-ing Paws Inc. More than 100golfers and guests gathered at TheBent Creek Golf Course in EdenPrairie, MN, on August 12 to sup-port Helping Paws of Hopkins,MN, according to officials.

This inaugural golf event ispart of Helping Paws’ initiative toconnect the healing power of serv-ice dogs with disabled veterans suf-fering from Post Traumatic StressDisorder. The cost of raising andtraining a service dog is estimatedat $30,000. These canine compan-ions can help to transition returningveterans back to civilian life.

“We are absolutely thrilledand proud to partner with importantcharitable organizations like Help-ing Paws,” said Duane Rouse,president and CEO of ABRA. “Werecognize the amazing accomplish-ments of our military veterans whoserved with courage and their un-ending drive to make a differencefor our country. Supporting thesetraining dogs to help heal our he-roes is a privilege.”

ABRA Helps Raise $30,000for Veterans’ Service Dogs

Sherwin-Williams and OnlineBlueprint Provider Team Up


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Documents

Gl 1013 issue web