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A California attorney who was hired to represent a victim of insurer steering is asking repair shops in that state to refer to her customers who were not fully reimbursed for their repairs because they chose a shop that was not part of the insurer’s direct repair program (DRP).

She is investigating six insurance companies — Topa, Delos, Nations, Sterling, Western General and Anchor General — and Multi-State Insurance Services, an administrator for several insurers.

Attorney Edie Mermelstein was hired by Eric Ortega after Ortega was steered to a Topa DRP shop for repairs to his damaged Mercedes-Benz. Ortega told his insurer he wanted to go to a collision repair shop that specialized in Mercedes-Benz vehicles, but was told by Topa that he would have to pay 20 percent of the repair bill from an out-of-network shop, Mermelstein said.

The Topa DRP had Ortega’s car for an extended period of time and returned it with broken door locks, broken headlamps and mismatched paint, she said. Topa and Multi-State, which wrote the policy sold by Topa, insisted that Ortega return the car to their DRP shop, which he reluctantly did. That proved to be a mistake and led Ortega to seek a legal remedy through Mermelstein.

“They mismatched his headlamps, broke some parts and his Mercedes-Benz looks like it was in a chop shop,” Mermelstein says. “They performed one bungle after another. It was terrible.”

Negotiated efforts to restore Ortega’s loss were unsuccessful, so Mermelstein filed a lawsuit on his behalf. The case is in discovery.

Mermelstein said her research opened her eyes to abusive insurer practices in the collision repair industry. She is investigating non-standard or restricted programs offered by insurers in California. Non-standard programs are designed for people who have trouble getting insurance.

“One of the restrictions in the non-standard policy is an 80/20 reimbursement, which is illegal in California,” she says. “These policies require consumers to contractually agree to these things, but they can’t make you waive your legal rights.”

She said they are taking advantage of drivers who have a hard time getting insurance.

“The terms of the contract and how they apply the terms violate Insurance Code 758.5,” Mermelstein says. “So many things are wrong with this policy. We looked at it on a class-wide basis. The DOI has been lax in enforcing anti-steering legislation. They turn a blind eye to it. All insurers have ways of steering customers. Consumers don’t understand their policy or their rights.”

Mermelstein is seeking to find California personal automobile insurance policy holders, issued by any one of the insurers mentioned above from Dec. 26, 2003 to the present, who received 80 percent of the cost of repair because they had their vehicle repaired at a non-DRP facility. They could become part of a class-action lawsuit against the insurers.

“We also are interested in talking to repair facilities with the DRP programs of the insurers regarding the labor rates and forced use of non-OEM parts,” she says. “The department of insurance has not been effective enforcing anti-steering laws. We need to put some heat on these laws so they can be enforced.”

Consumers forced to pay 20 percent of their repair bill can contact her by e-mail [email protected] or phone (714) 596-0137.