Pursuing Legal Action Against Insurance Companies
Ray Gunder is not shy about his mission. For years, the Florida shop owner has spread news of his ongoing legal battles with insurance companies throughout the industry.
Gunder estimates that he has been involved in more than 50 lawsuits against insurance companies for allegedly shorting his shop, Gunder’s Auto Center in Lakeland, Fla., on payments. Gunder has sued an insurance company for as little as $60 and has never lost a case.
“I’m taking the legal action so I don’t have to deal with it in the future,” Gunder says. “It’s the principle to me. … You’re going to pay me now, or you’re going to pay me later.”
Gunder recently sat down with FenderBender to discuss his legal pursuits, how they’ve benefited his shop, and why he believes he’s improving the industry one court case at a time.
What inspired you to take legal action against insurance companies?
I don’t think I woke up one morning and said, “O.K. this is it.” Somebody gave me the analogy of the boiling frog. You can take a frog and throw him into a pan of boiling water and that frog will jump right out. But you can take that same frog and put him in a pan of cool water and turn the heat up slowly, and he’ll boil to death.
Well, I recognized in the early 2000s that I was boiling to death. The insurance companies were constantly short-paying, telling me they’re not going to pay for this or that.
—Ray Gunder, owner, Gunder’s Auto Center
My net profit kept going down, and my expenses kept going up. I was just unable to make any more money. Now, I knew everything it took to fix these cars properly, and I had a choice to make. I could either start lowering my standards for how the cars should be fixed, cutting corners to make a profit, or I could make a stand.
The only way that I could stay in business and keep producing quality repairs was to get an attorney and attack the insurance companies to make them pay the proper amount to fix these cars.
How did you select your attorney?
Many years ago, I had an attorney and friend we did some work for. He would take care of little legal odds and ends for me, and when I decided to start taking this journey against the insurance companies, it was a bit beyond his expertise as a criminal law specialist.
He referred me to someone with experience in business litigation and contract law, Brent Geohagan.
When I first went to Brent and explained what was going on—that if I didn’t have some help making the insurance companies pay for what it really took to fix the car, I’d be bankrupt. I needed help finding a way to legally force insurance companies to make my customers whole.
He listened to my whole story. At the time, he pretty much did not understand how our industry worked. With some research, he started realizing that 100 percent of what I was telling him actually was going on in the industry and was shocked. We brought our first two lawsuits against an insurance company in ’08. Both were against State Farm for short pays on materials.
Over the years, Brent has developed into a very knowledgeable, passionate, angry attorney, who understands that our industry needs a lot of help.
How do the lawsuits work?
I get customers to sign over power of attorney to let me sue the insurance companies on their behalf for breach of contract.
During the repair, when the insurance company tells me they’re not going to pay, I’ll tell the insurance company, “I’m not going to get mad at you for not paying to repair this part of the car or for this procedure, as long as my customer doesn’t get mad if we don’t do it.”
That’s when I involve the customer. I love doing show and tell. So I invite them to come out and look at the car. I explain exactly what the insurance company does not want to pay for, and why I think it’s necessary.
And then I explain to them that if they understand what the repair is, and they want the insurance company to pay for the repair, they should call them.
If they can’t convince the insurance company to go ahead and do the right thing, I tell the customer that at the end of the repair, I’m not going to ask them to pay the money out of their pocket. I will simply get the customer to sign a power of attorney document, so I can step into their shoes and collect the money in court.
And that works very, very well. By the end of the conversation, the customer is always ready to sign the power of attorney. I think I’ve only had one customer that didn’t want to sign.
How much time and money have you spent on court cases?
My total journey, I’m going to say I’ve spent somewhere between $400,000 and $500,000 on legal fees, but we’ve recouped a large amount of that, because once they throw in the towel and lose the case, they have to pay our attorney fees. This is not true of all states, but we live in the great state of Florida, which has attorney fees provisions, meaning the losing party has to pay the winning party’s legal fees.
As far as time goes, I’m the type of person who doesn’t miss anything. I don’t miss pre-trial hearings. I don’t miss any depositions. I don’t miss anything.
I probably spend maybe six to eight hours a week studying litigation, speaking with my attorney, meeting with my attorney and making sure he is up to speed on everything.
Has the cost been worth it?
I can’t even describe how much it’s been worth it. It’s a totally different world I live in now because of the litigation. With the exception of State Farm, who gave us a fit even though they lost the cases, all of the other insurance companies now completely pay my estimates, because they know they can’t win in court.
I can put a number on it based on what I was making per job five years ago and what I’m making today. Currently, we do about 1,325 ROs (repair orders) a year. Because I am now paid properly on all procedures and materials, each RO on average is worth $360 more than before I started pursuing legal action. [That] adds up to well-over $450,000 of added revenue a year. That’s the amount of money that has come back to my shop, because of taking the insurance companies to court.
It has kept me from going bankrupt. I don’t know what’s best for every shop. I’m not going to say that every shop should take a legal stand, but it’s what has been best for Gunder’s, and it seems to be the only way that the insurance company would listen to me.
In your ideal world, what role would insurance companies play in the industry?
The way I view insurance companies now is there are good insurance companies that I have a great relationship with. They pay properly and want to take care of their customers, but there are others out there that I look at as the modern day mafia.
Their role should be to simply pay to repair the car back to pre-loss condition as best as humanly possible. We repair cars. They sell insurance. Their role should be to look at a job, realize what it takes to repair the car properly and agree to reimburse the consumer to do so. It’s fairly black-and-white to me. But there’s a lot of gray area in their eyes.
What’s your overall goal?
I want to leave this industry better than I found it. It was a decision I made early on that I wasn’t going to keep all this information in the confines of Gunder’s. I wanted to share it with the industry. And I share everything—transcripts, depositions, court hearings. Because of the exposure, we knew the insurance companies were going to dig their heels in harder and deeper.
But I did it because every shop in the nation gets the same thing done to them. They hear the same language: “We don’t pay that. That’s not preventing competitive pricing. That’s not preventing competitive practices.” We all live in the same world, and we all get beat to pieces.
I not only share the legal stuff, but I share how the estimates have changed and what the insurance companies are now paying for at my shop. So another shop owner can take that estimate to show the insurance company that they have paid for that material or procedure in the past.
Sharing is a good thing in this industry. Insurance companies have kept us all confined. I feel like I’ve already accomplished my goal. It’s a different world we’ve started to live in.