course a shop might have if an insurer attempted to direct the vehicle owner to another shop due to rate disagreements, Bryant said the first thing a shop should do is have the customer sign a proper authorization or contract to repair the vehicle. “The next thing that an educated shop owner should do is make the insurer involved aware of this contract to repair the vehicle in writing,” he said. “Then, if the insurer fails to make all reasonable efforts to reach an agreed price to repair the vehicle and convinces the shop’s customer to breach his or her contract, the shop will have the basis for a lawsuit for tortious interference.” Mikhail and BMR v. NJM, a class-action lawsuit filed in June 2019, alleged Prestige Auto Body was forced to substantially reduce its labor and paint charges to meet NJM’s “take it or leave it” pricing model, due to NJM’s failure to negotiate in good faith. NJM responded two months later by filing a motion to dismiss in which the defendant’s lawyer, Michael J. Marone, interpreted Section 64 as a way to “ensure that New Jer-
sey insureds have access to a number of licensed body shops that will perform the requisite work within the established estimates of New Jersey insurance carriers,” while also “preserving an insurer’s ability to obtain competitive prices that benefit the insured, minimize unnecessary costs and prevent excessive inflation of insurance premiums in the state.” Marone also claimed the statute “empower[ed] New Jersey insurance carriers, like NJM, to maintain a list of automobile repair facilities that perform repairs within the carriers’ established estimates.” Commenting on the lawsuit, Bryant said, “The insurer is dictating what it will pay rather than making all reasonable efforts to negotiate an agreed price to repair an automobile as required by the regulations governing fair claim settlement practices, while the New Jersey Department of Banking and Insurance looks the other way.” “When a collision shop fails to surrender and take whatever the insurer wants to pay, the insurer engages in unlawful ‘steering’ activity by claiming that the shop is being unrea-
sonable and overcharging; they then pressure insureds to have their vehicles repaired at specific ‘preferred’ repair shops that can afford to fix the vehicles at lower rates because of the high volume of work being steered to them,” he continued. “This type of suit has to happen because of the unwillingness of greedy insurers to work these issues out and pay fair and reasonable rates for the procedures now required to safely and properly repair vehicles on the roads today.” Insurers have also cited Section 64 to justify their refusal to pay for storage, since DRP shops wouldn’t charge them storage fees; however, according to Bryant, the statute only applies to repair, not storage. Though Section 64 hasn’t been enforced since it was initially decided, Bryant reported hearing about it now and predicted, “That is going to become an issue.” “Insurers have held labor rates down for years to an amount less than bicycle shops get paid for their services,” Bryant said. “With today’s vehicles, those days are over. There are specific repair procedures that
must be followed and have to be performed in order to put the vehicle back to a safe operating condition after it’s damaged in a collision. In a comparison he commonly makes between the insurance industry’s attempts to suppress labor rates and the game “Let’s Make a Deal,” Bryant said, “The collision industry needs to make it clear that it will no longer participate in such an activity. Insurers should stop playing games in order to hold down labor rates to an amount that does not reflect a fair and reasonable amount for the services collision shops provide or the investment they made in the training and equipment required to properly repair these cars. “[The collision repair industry] must insist on being paid a fair and reasonable labor rate for the work being performed and consider the training and equipment that is required to safely and properly repair these advanced automobiles,” Bryant added. “These issues are not going to get resolved by a divided industry.” www.autobodynews.com
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