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ASA Weighs In on Industry-Wide Litigation

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While repairer-insurer squabbles are nothing new, a wave of litigation and various other legal and legislative efforts initiated in 2014 added a new layer to the increasingly tense relationship between two of the industry’s key stakeholder groups.

A recent FenderBender feature (“A Changing Landscape,” January 2015) profiled how both the Attorney General’s Office of Louisiana and a separate, nationwide effort led by Mississippi attorney John Arthur Eaves Jr. are working to end direct repair agreements and bring the common issues of collision repairers—short pays, aftermarket parts and insurer steering—to the forefront of consumer awareness. Now a group of collision repairers are working to make the 1963 Consent Decree a formal law.

The high-profile efforts have garnered national news attention, including a spot on CNN’s “Anderson Cooper 360” program. But all are still unresolved with no clear timetable in place as of press time.

And the question remains: Is the issue catching on outside the industry?

Bob Redding, the Automotive Service Association’s Washington, D.C., representative, spoke with FenderBender about the ASA’s stance on the issues and what they could mean for the industry.

 

What are your thoughts on the wave of litigation taking place in the industry, and what, if any, is the ASA’s official position?

Courtesy Bob Redding

We have not established a position, but we’re familiar with [the various cases]. I believe a significant number of them were recently dismissed. From an association standpoint, we have not been part of that.

We are concerned about insurer mandates. One of the most high profile cases has to do specifically with parts procurement, and it’s a serious issue that we’re following. We have a real problem with that piece, and we’ve been very focused on legislation that would prohibit that. We have talked to various state legislators on how to cure that.

One of the issues we have in the industry is that when we have a problem arise, like these mandates related to parts procurement, we tend to wrap all the concerns in one package. Legislation then addresses too many issues and things gets bogged down.

I can only speak for our association, but we’ve had the most success when we prioritize issues and try to do one thing at a time, as far as these bills or proposed regulation. For us, the insurer mandates issue rolls into parts procurement. Similar to these Most Favored Nation clauses, we had one major insurer drop it, and if they do go away without any legal remedy, that’s great for all parties. We are concerned about those. On the insurer mandates related to parts procurement, that’s quite probable [that ASA would get involved]. I’d rather not say more than that right now.

 

Recent legal actions by a handful of state attorney generals have taken these repairer-insurer squabbles to the consumer. Is that significant, and do consumers truly care?

We have, over a lengthy period of time, tried to gauge consumers more, specifically with insurance commissioners and attorney generals. Specific to insurance commissioners, ASA took a team of collision repairers—we had national leaders, collision repair leaders from various states involved—and we met with insurance commissioners in multiple states to discuss how calls come in from insurers, how calls are dealt with by call center staff, how issues are investigated. What was of concern to us was the lack of complaints. What we were told by some of the insurance department’s investigators was that by the time the complaint comes in and the investigation is initiated, the vehicle has already been repaired and so the complaint goes away.

For example, if it’s a steering issue, the shop explains what the rights are and the consumer files a complaint. When the investigator follows up, even though the car has been repaired by a shop that the consumer didn’t originally want, the consumer doesn’t want to pursue it anymore.

Getting consumers engaged in this piece is difficult. Every group has their own way of pursuing this. We think educating the consumers is critical. We certainly don’t condemn others that might try other methods.

 

Other industry efforts are focusing on making the 1963 Consent Decree law. What is the ASA’s position on this front?

I’m very familiar with the Consent Decree. ASA, with repairers from several states, met with the Department of Justice a number of times on this on the regional level, and here in Washington. We were not encouraged to prepare this as an option.

It’s been discussed in our industry for a long time. What we did was, at the time, we had the general council for the House Judiciary Committee and antitrust lawyers that we hired to take an independent view of this; we had consumer groups and others. We held a discussion about it and the consensus was that we needed to look in other areas. We also did this in Chicago. We had different lawyers there. We did the same thing. It was the same message. That’s an area that we felt like we really exhausted.

We felt like when we met with the litigation team both times, we were told for us not to spend time on it and they were not going to pursue it, so we’ve gone on to other things.

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