AB 1483
In last month’s newsletter we advised you that we had supported this bill. Our reasoning in doing so was based on a number of issues. We wanted to make sure everyone understood our position. First, legislators on the committee indicated to us that the author had sufficient support for the bill to get it out of the committee. We believed the bill as originally drafted was unacceptable and when we had an opportunity to meet with the bill’s sponsor, we fought for compromise language. The sponsor agreed to make amendments we requested, namely, removing the reference to BAR; changing the certification requirement to an affirmation that the crash parts invoiced had been installed; and allowing the affirmation to be done by a R.M.E. We believed that arguing against such a requirement would be the same as opposing honesty. Secondly we contended that our language would further clarify an issue that has been repeatedly raised by BAR. In recent disciplinary actions, the BAR has tried to require that the shop’s estimate match the insurer’s. We see no place in the Automotive Repair Act where this is required, in fact, the statutes are clear that the contract is between the shop and the
would add to our position and hopefully put this issue to rest. It would be hard to hold out any document as a document of record other than your invoice, when the state has required your affirmation on your invoice.
If we had simply opposed the bill and not compromised on the changes and the bill had passed without “ no” votes, it would then have been placed on the consent calendar and who knows what we would have ended up with.
Our negotiations allowed us to make changes that were favorable to our position as consumer advocates and that should help us in the future as we
plan to go back to the Legislature with another consumer related issue related to disclosure.
Specifically, we are formulating language to address the issue of insurers requiring shops to use aftermarket parts on vehicles under warranty. We believe that at a minimum the consumer should be advised of the possible effect the use of an aftermarket part might have on a manufacturer warranty. We are interested in hearing your views on our position and proposal. If you would like to weigh in on this, send an e-mail to Allen at
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BAR
A great deal has happened in the last month. We were scheduled to depose BAR staff on May 17 and 18 regarding the Concierge Program: however the depositions were rescheduled to the 30th. We previously advised that Senator Ridley Thomas’s office had sent a letter of inquiry to Chief Mehl, regarding her handling of the Progressive Concierge Program in SanDiego. On Sunday May 20th the San Diego Union-Tribune ran a story on the front page about the Concierge program. We have posted the article it on our web site .You can also obtain it from the Union Tribune’s web site. Type in the reporter’s name, Penni Crabtree, to locate the article.
The current BAR Chief Sherry Mehl’s confirmation hearing is set for Wednesday, June 6th 2007. You can listen via the State Senate web site(www.sen.ca.gov) on the day of the hearing. Click on “Audio” on the menu(left side of page), then click on “ listen” and you will be taken to the page that lists hearings to be broadcasted that day. The hearing will be held by the Senate Rules Committee which is also reviewing the confirmation of two UC regents that day. We have notified the committee members and Ms. Mehl that we oppose her confirmation and we will testify in opposition to her appointment at the hearing.
The reasons for our opposition to Mehl are detailed in a letter sent to Senate Rules committee members. The letter is posted on our web site. In brief, the CRA opposes her appointment based on her failure to explain why the cease and desist order against Progressive Insurance was rescinded after she was named acting chief of the BAR. CRA executive director Allen Wood will testify in opposition to Mehl’s appointment.
The Los Angeles Times is apparently doing research on this issue and we have been told that a story may be done regarding, in part, the rescission of BAR’s cease and desist order against Progressive shortly after Mehl became BAR chief.
We have been told that the California Auto Body Association is not going to oppose the appointment of Mehl as BAR Chief. We feel that our opposition to the chief’s appointment is an opportunity for this industry to stand up to the insurers and take a position in support of our future. If Progressive is allowed to continue, other insurers will follow if only to gain the competitive advantage that Progressive enjoys under this special arrangement.
CRA brought suit to force the BAR to enforce its cease and desist order, an order that the prior chief saw fit to issue. Our board is firm on its position that this industry should be allowed to function on a level playing field, with all involved in the industry playing by the same rules.
The concierge program was characterized by Rosemary Shahan, of CARS, an auto related consumer group, as “steering on steroids.” We were recently asked by a non-CRA member at a CAA meeting to explain “ what we were doing about steering. ” Clearly our lead role in opposing the BAR’s decision to all allow Progressive to continue operating its Concierge Program is a prime example of our active role in fighting steering.
The appointment hearing for Ms. Mehl has been put off until June 18th or 20th.
Depositions were conducted on May 30th as scheduled. On the 25th we received a box of additional discovery, containing over 1000 pages. The items were mostly related to the investigation of the Progressive facility and shops doing their work. The discovery contained notes of the investigator. Under oath he testified that he had been ordered to stay out of the Progressive facility, that he could not contact shops that did their work or continue to contact customers who had used their program. He also testified that he had protested those orders and in his opnion they ,Progressive , were acting as an auto repair dealer. We’ll keep you posted.
Board of Equalization
Gene and Allen met with Judy Chu, a member of the Board of Equalization, to discuss the tax issues related to capping. We had also been discussing this issue with Auto Body News (ABN) which wanted to do a story. We suggested that ABN contact Member Chu and it did .She was kind enough to share her responses with us. Ms. Chu is extremely interested in these issues and is trying to do what she can to alleviate the problem and is currently communicating with Commissioner Poizner regarding the issues. It is important that we remember our supporters-- a call of thanks and future support could go a long way. If you read her response, the key to the issue is that when the shop accepts payment, the payment constitutes the gross receipts upon which tax is due. The balance owed needs to be on the invoice shown as “paid short” to document the capping.
Senate Tax Committee Chair Responds to CRA Complaints on Insurer Paint Capping Practices
After hearing complaints from CRA members, Senator Jenny Oropeza (D-Long Beach), chair of the State Senate Revenue and Taxation Committee, has written Insurance Commissioner Steve Poizner asking him to send a letter to insurers on the illegality of capping the value of paint and materials used in collision repairs. Senator Oropeza joins the growing number of elected officials who want to know what the new commissioner will do about insurers who use illegal price caps despite a Department of Insurance prohibition against such tactics.
Senator Oropeza’s letter, sent May 6, 2007, asked the commissioner for his plans to “reduce the incidence of insurers failing to pay for reasonable charges for taxable goods and materials used in the repair of a vehicle.” The commissioner’s office has informed the CRA that a paint capping workshop for insurers and repairers may be scheduled within the next month. Wood stated, “The CRA appreciates Senator Oropeza’s concern for fair business practices. Our message on capping of paint and materials is being heard loud and clear by lawmakers. We look forward from appropriate action taken by the Insurance Commissioner.”
Dept of Insurance
Gene, Brent, and Alayne met on May 24th with Gary Cohen, the Chief Legal Counsel for the DOI. Upon their arrival they found that Patricia Campbell, Senior Staff Counsel, Jose Aguilar Assistant Chief Counsel, and Woody Gerion Deputy Commissioner were in attendance. They stated that they wanted to demonstrate their concern by all being there and they indicated that the proposed regulation package dealing with labor rate surveys would be out for review by the end of July 07. Mr. Girion advised that they were considering requiring the insurers to ask the customer “do you have a shop in mind today where you want to have your car repaired?” If the customer answers “yes,” no further discussion could be undertaken to influence the customer’s decision. If the customer stated “no”, then the insurer is free to sell its program to the customer. This is a process that Gene has been discussing with the Department for some time now.
Gene advised that the current labor rate surveys and the departments acceptance of those surveys only served to allow the insurers to defraud their customers, and by accepting the surveys, the department was participating in that deception.
Another topic of discussion was the questionable methodologies used by the department’s Fraud Bureau to prosecute shops for alleged insurance fraud. Gene pointed out how they impose the provisions of section 550(b) P.C. on shop employees yet ignore the conduct of insurance adjusters that violate that same section of law on a regular basis. He also stated that the industry expected fair treatment and an equal application of the law, that the department was creating an environment in which the repair industry could not function on an equal basis.
Concerns for the short comings of the Geico settlement were discussed. The department defended the terms by saying that the current settlement was basically a warning that set the stage for future disciplinary action, if Geico should not comply. The department asked that we continue to file complaints so that it would have the necessary ammunition if Geico doesn’t comply. Department officials also stated that they are looking at unfair claims practices regarding patterns and practices of requiring the filing of small claims cases for reimbursement of costs, especially against Geico and State Farm. They stated that they were interested in the concerns that were presented and wanted to try and make changes.
In closing Gene advised that that to date Geico’s conduct was unchanged, that he understood the department’s position but was concerned about its ability to facilitate a reasonable outcome. The meeting was ended with a general understanding that although the department believed it had done everything it could , the industry has to provide information regarding
non- compliance to document Geico’s misconduct.
The association is in contact with a law firm in San Francisco regarding a possible class action suit related to these issues.
The association would like to acknowledge or associate members (sponsors) and ask our members to remember and support them as they are supporting our cause.
Tallys Paint 707-255-7678
Novato Ford 415-895-3000
Kent Automotive 916-803-5476
Jimmy Vasser Chevrolet 707-255-7600
Western States Environmental Services 530-226-1994 |
