New England Automotive Report February 2021

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4 February 2021

New England Automotive Report

February 2021 • Volume 19, No. 2

DEPARTMENTS

CONTENTS AASP/MA FEATURE

PRESIDENT’S MESSAGE

by Kevin Gallerani

6 | Funding the Future

EXECUTIVE DIRECTOR’S MESSAGE

by Evangelos “Lucky” Papageorg

10 | The Reign of Terror

LOCAL NEWS

12 | AASP/MA’s Nadine Nesbitt is One of The Strong Ones

by Alana Bonillo

16 | In Memoriam: Bessie Papageorg

20 | LABOR RATE: Facts, Fiction and the Future – Part 4 (An Economist’s Perspective)

by Fred Jennings, Jr., EconoLogistics

COVER STORY

NATIONAL NEWS

18 | NORTHEAST® Rescheduled to September 10-12, 2021

LEGAL PERSPECTIVE

by James A. Castleman, Esq.

32 | Should You Encourage Your Customer to Use the Completed Work Claim Form?

ALSO THIS ISSUE 7 | AASP/MA MEMBER APPLICATION 19 | AASP/MA VENDOR AFFINITY PROGRAM SPONSORS

24 | Elevating AASP/MA: Inside the Restructured Board of Directors

by Joel Gausten

New England Automotive Report

February 2021 5

PRESIDENT’S MESSAGE

Funding the Future KEVIN GALLERANI

This is my first message for New England Automotive Report as president of AASP/MA. In addition to being honored to receive the trust and support of our members to lead the association forward, I’m fully aware that I have some major shoes to fill.

Molly Brodeur dedicated herself to serving as president for six years, and AASP/MA – and the entire Massachusetts collision/ mechanical repair industry – is better and stronger because of her tireless efforts. As president, I hope to honor and continue the tremendous path Molly created for us while driving the association in promising and productive new directions. Above all, I will work with Executive Director Lucky Papageorg and our Board of Directors in furthering our commitment to protecting the rights and safety of Massachusetts automotive consumers.

As regular readers know, we are working hard to have an impact at the Legislature. With COVID-19 and other matters dominating so much of our legislators’ time and attention, AASP/ MA needs to maintain a strong presence on Beacon Hill to ensure that our voices are heard, are considered and ultimately result in the much-needed changes necessary to safely and professionally serve the motoring public. To help us in our mission, we have enlisted Guy Glodis of The Glodis Group to serve as AASP/MA’s lobbyist. Additionally, we have established a new Lobbying and Legal Fund to raise the capital needed to keep these activities alive. I urge you to contribute to this new endeavor and help us help you.

Last year was an incredibly challenging time for everyone,

STAFF

AASP/MA EXECUTIVE COMMITTEE

PUBLISHER

President Kevin Gallerani

SALES DIRECTOR

AASP/MA STATEWIDE DIRECTORS

EDITORIAL DIRECTOR

Director At-Large Adam Ioakim

Thomas Greco | thomas@grecopublishing.com

Alicia Figurelli | alicia@grecopublishing.com

Joel Gausten | joel@grecopublishing.com

EDITORIAL/CREATIVE COORDINATOR Alana Bonillo | alana@grecopublishing.com

OFFICE MANAGER

Donna Greco | donna@grecopublishing.com

PRODUCTION COORDINATOR

AASP/MA DIRECTORS

and 2021 will likely present new obstacles that we will need to overcome. We must continue to work together to achieve our common goals in this industry. I encourage everyone reading this message to get involved as much as possible and reach out to us if you are encountering an issue that could be addressed through us or have an idea or information that could benefit shops or consumers in the Commonwealth. This association is here for you, but we are only as strong as our membership. Whether you are a veteran member or new to the AASP/MA experience, we need you now more than ever. And if you’re not a member, please join us today!

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

AASP/MA PRESIDENT KEVIN GALLERANI is president of Cape Auto Collision Center in Plymouth, MA. He can be reached at (508) 747-0316 or kevin@capeautobody.com

Vice President Matthew Ciaschini

Treasurer Dana Snowdale

Legislative Director At-Large Tom Ricci

ZONE 1 Mike Penacho Dan Wenzel John Studer

ZONE 2 Ray Belsito Joshua Fuller Brenda Lacaire

Affiliate Director Rick Fleming

Affiliate Director Bill Spellane

ZONE 3 Andrew Potter Brian Stone Phil Morin

Secretary Gary Cloutier

Collision Director At-Large Rob DelGallo ZONE 4 Kevin Kyes Jim Marshall Paul Tuscano

Joe Greco | joe@grecopublishing.com

PUBLISHED BY: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963 www.grecopublishing.com

AASP/MA ADMINISTRATIVE OFFICE AASP/MA Executive Director Evangelos “Lucky” Papageorg

New England Automotive Report is published monthly by TGP, Inc., 244 Chestnut Street, Suite 202 Nutley, NJ 07110. Distributed free to qualified recipients; $48 to all others. Additional copies of New England Automotive Report are available at $5 per copy. Reproduction of any portions of this publication is specifically prohibited without written permission of the publisher. The opinions and ideas appearing in this magazine are not necessarily representations of TGP Inc. or of AASP/MA. Copyright © 2021 by Thomas Greco Publishing, Inc. Images courtesy of www.istockphoto.com

6 February 2021

New England Automotive Report

AASP/MA Administrative Assistant Alana Bonillo

WWW.AASPMA.ORG

Affiliate Directors Frank Patterson Jeff White Don Dowling P. O. Box 850210 Braintree, MA 02185 617-574-0741

New England Automotive Report

February 2021 7

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New England Automotive Report

New England Automotive Report

February 2021 9

EXECUTIVE DIRECTOR’S MESSAGE

The Reign of Terror EVANGELOS “LUCKY” PAPAGEORG

There have been many instances in the past where I have mentioned that the collision repair industry is in a state of evolution rather than revolution. Evolution is a mightily slow process, and the changes can be so slight that they can hardly be noticed by the untrained or less knowledgeable. By contrast, a revolution is one that can bring on rapid change but can also take time to take hold and muster support.

In a revolution, however, you would have to try extremely hard not to acknowledge that something very powerful is taking place. I can make a very good case for the need of a revolution in our industry.

Since the Automobile Insurance Reform Act of 1988, the collision repair industry and those it serves have been abused and oppressed by a truly ruthless tyrant. Customers have been forced to take their vehicles where the insurers want them to go based solely on price. In many cases, training and quality have not been taken into consideration.

Longtime customer relationships have been sacrificed, and a huge chasm has been created within our own industry.

Insurers pit shops against each other under the guise of keeping insurance premiums in check for the insureds. All of us – shops, vehicle owners and, yes, even the insurers – know that this is unadulterated BULLS**T! Insurance premium increases may have slowed initially but have not been held in check to any true degree over the past 30-plus years. By comparison, and without any real justifiable reason, the insurance reimbursement rates have been stagnant since 1988. All of this has led Massachusetts to be in 50th place (among 50 states) regarding Labor Rate reimbursement while being in the top five most expensive states to conduct business. Grounds for a revolution? I certainly think so!

We have been experiencing the systematic destruction of an industry at the expense of the vehicle owners here and across the country – but especially here! Remember, we are in last place! This is exactly why we have a workforce that is aging out faster than new technicians can be trained, let alone convinced to consider the collision repair industry as a profession where they cannot only be proud of what they produce but also earn enough to sustain themselves and their families. Where is the incentive to keep up with everchanging technology and repair procedures? Shop owners and technicians alike are expected to continue their training, buy new very expensive equipment and pay higher liability insurance premiums, etc. while netting less and less for having done so. Grounds for a revolution? I certainly think so!

I do see more and more shops and insureds beginning to push back against the tyrannical actions of insurers. They are no longer taking crumbs the insurers are offering without

10 February 2021

New England Automotive Report

asking for justification or proof. Slowly, we are seeing the days of “because I said so” or “that’s all we have to pay” fall by the wayside. One way to expedite this process is to be informed yourself and to educate your customers. You need to make your customer wise to the tactics the insurer uses to pit them against you. You need to inform your customer that you are doing what is right for them. Nothing will bring a smile to your face quicker than when a vehicle owner calls you back and says, “They said exactly what you said they would almost word for word.” This is the moment when you will know that you have created an ally in the battle of getting that vehicle owner what they were owed. It is not that insurers will just give in, but it sure will weaken their position. It will put that company on the defensive instead of the other way around. As the saying goes, the best defense is a good offense. The makings of a revolution? I certainly think so!

Many shops out there think they have no choice in this matter, that it is useless to put up a resistance or that we need to go along to get along. I would argue that all you need to do is to look around you and see how well this philosophy has served the collision repair industry to date.

Sure, initially your “partners” may have treated you a little bit better to use you as a shining example to keep others in line. This may have helped to reduce your cycle time, but ultimately at what cost to you and your customer? As with any history, if we do not learn from the past, we are doomed to repeat it. All too often, we have seen how insurers pit us against each other – not as business competitors, which would be normal, but as entities trying to survive on the meager scraps they “give” us to fight over without regard for the insured.

How often have you had to listen to an insurance appraiser say, “I’ll give you a couple of hours on that dent”?

How about, “I’ll give you the procedure or R&I”? I would agree to the concept of “giving” if you did not actually have to do the repair or process. Now that would truly be a “gift”! More and more shops are looking beyond the “gift” and understanding how insulting the notion is. To add insult to injury, we are also supposed to be grateful for their generosity. The resentment is building and becoming too much to bear. Again, I ask, the makings for a revolution? I certainly think so!

AASP/MA is here to continue to give you the tools to rise up and stop the tyranny. We will continue to provide you with the information and resources you need so that you can be a better advocate for your customer and your shop. AASP/MA advocates for you at meetings with our continued on pg. 30

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New England Automotive Report

February 2021 11

[LOCAL] NEWS

by Alana Bonillo

AASP/MA’s Nadine Nesbitt is One of The Strong Ones AASP/MA’s very own Nadine Nesbitt is quite a powerhouse.

If you own a body shop in Massachusetts, you likely have interacted with Nesbitt, who is known throughout the auto body community as assistant to AASP/ MA Executive Director Evangelos “Lucky” Papageorg. But chances are you didn’t know that she was one of a select group of civilian women who were part of a US Army Women’s Strength Study in Natick more than two decades ago that tested the physical power of women in order to prove that they can be just as strong as men.

Nesbitt and others proved this true and then some. Her story will be featured in the book The Strong Ones: How a Band of Civilian Women Made Their Mark on the Army by best-selling author and fellow study participant Sara Hammel. The book, which will be released this month and can be pre-

12 February 2021

ordered via Amazon, explores the unique study in the wake of its 25th anniversary.

It was luck that led Nesbitt to this opportunity. She first learned of the study via a newspaper article about scientists who wanted to determine if women could do the same physical tasks as their male counterparts through proper training.

“It fascinated me. I thought, ‘Of course, it’d be true with proper training.’

They were looking for civilians to volunteer.

I was over the age limit, but I applied. I didn’t hear back at first, but I guess they didn’t have enough of a response, because they adjusted the age limit and called me in.”

From there, Nesbitt entered into an intense daily 90-minute challenge that went on for seven months.

“It was more amazing than I ever expected. Of course, we proved that we can

New England Automotive Report

Nadine Nesbitt (far left) on the cover of the upcoming book The Strong Ones accomplish the same tasks as men, but we realized that what was even stronger was our commitment to the workout. Because we were all together, we were able to help each other. That collaboration and that encouragement was over the top.”

Nesbitt completed strength tests, including running two miles through the woods dragging a trailer loaded with continued on pg. 39

New England Automotive Report

February 2021 13

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New England Automotive Report

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New England Automotive Report

February 2021 15

[LOCAL] NEWS

In Memoriam: Bessie Papageorg Bessie Papageorg with children (left to right) Lucky, Maria and Carolyn

AASP/MA regrets to report that Bessie (Stamoulis) Papageorg, mother of Executive Director Evangelos “Lucky” Papageorg, passed away peacefully December 27 at the age of 99 with her family by her side.

Bessie loved reading, knitting, crocheting and spending time with family and friends. She was a member of the Braintree Council of Aging, where she enjoyed attending the crafts and knitting circle, for nearly 30 years. She received recognition for her handmade donations of lap robes for veterans; blankets, sweaters and hats for premature babies; and BEST CHEVROLET_NEAR0320.qxp_Layout 2/12/20 for 12:02 1 mittens, scarves, hats, gloves and1afghans thePM lessPage fortunate and patients of nursing homes and rehabilitation centers.

A longtime member of St. Catherine’s Greek Orthodox

Church in Braintree, she is survived by her son, Lucky, and his partner, Juli Ra-Goodman; daughter Carolyn “Carol” Watts and her husband, Paul Watts; daughter Maria Papageorg and her late fiancé, David Orchard, Jr.; her grandchildren, Heather Keen and Kristen Watts; godson Manny Tamvaklis; and many nieces and nephews. She was preceded in death by her husband, Xenophon, who passed away 17 years ago.

Donations in her memory can be made to The Building Fund Account – St. Catherine’s Greek Orthodox Church, 119 Common St., Braintree, MA 02184. Funds received will go towards retiring the mortgage on the church.

AASP/MA and New England Automotive Report send our condolences to the Papageorg family.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

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New England Automotive Report

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New England Automotive Report

February 2021 17

[NATIONAL] NEWS

Rescheduled to September 10-12, 2021 The 2021 NORTHEAST® Automotive Services Show will take place this year – just a little later than originally planned.

Originally scheduled for March 19-21, NORTHEAST 2021 is now set for September 10-12, 2021 at the Meadowlands Exposition Center (MEC) in Secaucus, NJ as per an announcement by the Alliance of Automotive Service Providers of New Jersey (AASP/NJ).

“As the COVID-19 vaccines begin their rollout and the light at the end of the tunnel starts becoming clearer, AASP/NJ has decided – out of concern for everyone’s safety as well as taking into consideration current government restrictions and limitations on large gatherings and travel – to reschedule,” explains AASP/ NJ President Jerry McNee. “AASP/NJ is focused on serving our industry and working with our community to provide the necessary support and information to prepare them for a successful 2021 event.”

After speaking with vendors and association members,

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New England Automotive Report

AASP/NJ is confident that the new dates in September will provide the automotive repair community with the time to effectively plan their participation during these challenging times.

Protecting everyone’s health and safety remains AASP/NJ’s priority. The association is working closely with the MEC to ensure a safe environment. The show will follow every prescribed health and safety protocol.

“It looks like we will still be the first industry show of the year in September,” McNee says. “I know that everyone is anxious to get out and start getting back on the road to normalcy. NORTHEAST will be the first opportunity in over a year for our industry to gather, and we think it will be a very inspiring event for everyone involved.

We expect NORTHEAST 2021 to be bigger and better than ever.”

Pre-registered NORTHEAST 2020 attendees will not need to re-register, as badge data will be carried over to these new dates of September 10-12.

For updates and information on NORTHEAST, please continue to visit the official event website, aaspnjnortheast.com, and visit AASP/NJ online at aaspnj.org.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

A M P/

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Thanks to our VAP Members for their continued support during this pandemic crisis.

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New England Automotive Report

February 2021 19

[AASP/MA] FEATURE

by Fred Jennings, Jr., EconoLogistics

Labor RatE:

Facts, Fiction and the Future - Part 4 (An Economist’s Perspective) Editor’s note: For this latest installment in our ongoing series on the Labor Rate, we welcome economist Fred Jennings, Jr. for his second in a series of articles that will feature his research and perspectives on the issue. We thank Fred for his contributions and welcome reader feedback on any of the topics he presents.

This is my second in a series of four articles that take an indepth view into the Labor Rate issue in Massachusetts. The first part described the current situation and discussed the 1963 Consent Decree and litigation involving the collision repair industry.

This second part will address the real level of Labor Rates in a market not controlled by insurers, using widely accepted methods of economic evaluation.

The third part will discuss two arguments: Auto insurers maintain an “efficiency argument” that their control of the collision repair market benefits policyholders by cutting costs and premiums, and the collision repair industry adopts a “market power interpretation” that auto insurers’ behavior neither benefits policyholders nor protects their safety.

The fourth part will test these two views, based on a statistical analysis of Labor Rate patterns. The analysis will be explained, its method described and the findings reported and interpreted.

Introduction In my previous piece, I described the insurance industry’s priceprofit squeeze against the collision repair industry and discussed the 1963 Consent Decree, the Auto Body Association of Connecticut’s (ABAC) case against the Hartford Insurance Company and other collision repair litigation. In many such cases, I have served as an 20 February 2021

New England Automotive Report

economic damages expert.

The tasks required of me in this role are: (a) to assess the losses incurred by independent providers of collision repair services due to auto insurers’ steering of repair work away from them, and (b) to evaluate the economic impact of auto insurers’ suppression of Labor Rates in a particular area. Each task calls for quantifying financial losses by comparing what happened against a “but for” projection of what would have occurred otherwise (in the absence of the alleged offense). Developing this “but for” projection is always the most challenging part of my assignment.

Steering I will not go into any detail on the steering analysis beyond noting that the projection of the “but for” world (that might have occurred) is based on comparing the market shares of auto insurers with their shares of insurer-paid revenue for the collision repair shop(s) in question. This is one way to estimate the repair jobs lost by those shops due to auto insurers’ steering. Other ways to assess steering effects usually call for data not available from insurance defendants.

Labor Rate Suppression This analysis focuses on Labor Rate suppression on what collision repair rates would be in an uncontrolled “but for” world.

The method used is based on comparable sales adjusted for relevant differences. This valuation method is well established in economics, general use and in both US and international tax law. Consequently, it carries a lot of credibility in US courts.

What Would Labor Rates Be in an Uncontrolled Market?

The question of what the actual level of collision repair Labor Rates would be in a truly free market setting is important. The same concerns apply to internal cross-border “transfer prices” among wholly owned units within multinational firms. Why should anyone care?

The answer is simple. Every national tax authority on the planet insists that such cross-border prices adhere to an “arm’slength standard” – namely, that they reflect what independent, self-interested parties would charge, because these prices serve as a means to shift taxable profits from high to low tax jurisdictions.

So, there are good reasons for regulations and laws on the setting of transfer prices to justify them economically based on the value being exchanged. These internal cross-border transfers are controlled in ways similar to how collision repair Labor Rates are restricted by auto insurers. Consequently, the widely accepted procedures employed in this context can be used to evaluate the “but for” level of collision repair Labor Rates in an uncontrolled market (such as specified in the 1963 Consent Decree).

The preferred method of establishing an “arm’s-length” price is to find comparable transactions by independent self-interested parties. A close comparable to collision repair work is auto mechanical repair work. They are almost perfect comparables; they serve the same set of users paying for labor hours and parts. There are some minor differences in the nature of the repair services, their capital requirements, the skill sets and training required and the risks involved in these activities. But the most significant difference between collision repair and mechanical repair services is that the former is under auto insurers’ control and the latter is not.

Consequently, hourly Labor Rates for mechanical repair services supply a “comparable uncontrolled price” (CUP), providing a benchmark for what the level of hourly collision repair Labor Rates would be in an uncontrolled market based on the arm’s-length value of these services.

Because mechanical repair services are not a perfect comparable for collision repair work, the transfer pricing rules state that CUPs should be adjusted to reflect any identified differences, such as those previously listed. Let us look at each in turn.

The Nature of the Services Provided Virtually all collision repair work is customized to a particular crash. Damaged parts must be straightened or replaced and fit precisely with those not damaged, and there are often other structural issues to be resolved as well. The repairs must not compromise the integrity of the vehicle, either for regular use or especially if crashed again. When I was introduced to this industry, Sheila Loftus1 said, “Collision repair specialists are all artists.”

I was surprised at this, since it conflicted with the general image of collision repair shops as corrupt!2 Some years later, I was shown a cleverly designed frog crafted from spoons produced for a collision repair shop owner by one of his repair technicians that confirmed Loftus’ remark. That little work of art gave fine testament to the technical craft of collision repair work.

The question of what the actual level of collision repair Labor Rates would be in a truly free market setting is important.

Mechanical repair work, in contrast, is standardized and formulaic. There are plentiful books and manuals showing “how to” do these repairs, which mostly involve replacing individual parts in need of attention.

Differing Capital (Plant and Equipment) Requirements Mechanical repair shops have diagnostic equipment, but not much is involved other than lifts and hand tools. Many collision repair shops perform mechanical repairs, so they often have the same equipment as mechanical repair shops. However, auto body shops must also have a large array of highly specialized and costly equipment used for straightening frames, bending metal, painting and buffing, scanning, etc. The capital requirements of collision shops exceed those in mechanical facilities.

A Comparison of Skill Sets and Training Requirements As previously stated, mechanical repair work is standardized and formulaic, articulated in simple step-by-step “how-to” manuals, so the training is not difficult. Collision repair technicians, on the other hand, must master a wide variety of skills to repair crashed vehicles, and that requires a lengthy and rigorous training process.

They can shift into mechanical work, because it is easier and often pays better (due to insurers’ suppression of Labor Rates), while mechanical repairers cannot shift into collision work without a lot more experience and training.

The Relative Risks of These Two Activities The relative risks in these two activities are very different. For mechanical work, if a part goes bad, it is simply replaced with a minimal risk to shop owners. The risks of collision work can be considerable. Auto body service providers are required to restore a vehicle to its “pre-crash condition” or some equivalent thereto.

Here, it is not an issue of whether one part works or not; it involves the safe functionality of the entire vehicle in which a diverse and unknown array of components suffered damage. (By the way, it is important to note that having a consumer sign a waiver in instances where repairs do not bring a vehicle back to “pre-crash condition” does not necessarily negate a shop’s liability as the collision repairer.)

Each crash differs from every other; the “quality” of ensuing repairs is also hard to assess. When a collision repair job involves shortcuts or substandard parts, such poor work can pass unnoticed back onto our roads.

Deriving an Adjusted Comparable Uncontrolled Price (CUP) These comparisons show that collision repair work is harder, more costly and riskier than mechanical work. The implication is continued on pg 31

1

Sheila Loftus was the executive director of the Washington Metropolitan Auto Body Association (WMABA) and editor of a well-respected national collision repair publication called Hammer & Dolly (now produced by TGP, Inc., publishers of New England Automotive Report) as well as a profoundly knowledgeable expert on all collision repair issues.

2

I hasten to say that my experience over the last 27 years with this industry has led me to a quite different conclusion about collision repair providers! I have had the honor of working with a stunning array of very impressive, knowledgeable and profoundly honorable people throughout the collision repair industry.

New England Automotive Report

February 2021 21

RELIABLE

NEW

[COVER] STORY

by Joel Gausten

ELEVATING AASP/MA: Inside the Restructured Board of Directors The AASP/MA Board of Directors now looks a lot different than it did just two months ago.

As a result of the most recent Board elections and AASP/ MA’s focus on encouraging as much participation as possible from the Massachusetts collision repair community, the association will be moving forward with a greatly expanded Board that is now comprised of two dozen members.

Kevin Gallerani (Cape Auto Body; Plymouth) has been elected to serve a two-year term as AASP/MA president. Matthew Ciaschini (Full Tilt Auto Body & Collision; Easthampton) has been elected vice president, with Dana Snowdale (D&S Auto Works; Abington) and Gary Cloutier (Cloot’s Auto Body; Westfield) serving as treasurer and secretary, respectively. Adam Ioakim (Hogan & Van Auto Body; Medford) will serve as director at-large, while 24 February 2021

New England Automotive Report

Rob DelGallo (Factory Collision & Restoration; Weymouth) will represent the association as collision director at-large. Tom Ricci, owner of Body & Paint Center of Hudson, will serve as legislative director at-large. Board representation from general directors will be divided into four regional zones: Boston/Southeast (Zone 1) , Midstate (Zone 2), Western (Zone 3) and Boston/Northeast (Zone 4). (A complete list of the new AASP/MA Board of Directors is available on page 6 and in the current issue of the members-only Damage Report newsletter.)

Zones will also be represented by “affiliate directors” who will serve on the Board but will not have voting power. These positions are largely reserved for previous Board members who were not formally re-elected.

“We needed new blood, but we didn’t want to lose the

experience of those who have been involved in doing things along the way,” explains AASP/MA Executive Director Evangelos “Lucky” Papageorg. “We wanted to make sure that if an existing incumbent director didn’t ‘make the cut,’ so to speak, their time, knowledge and guidance weren’t going to be lost. They weren’t taken out of the picture; they will now be considered an ‘affiliate’ director. The goal is to have more hands involved. Secondarily, the ‘affiliate’ director position has been created as an apprenticeship for members who are not previously experienced on the Board but would like to become more engaged and learn about the inner workings of the association.

“Anyone who’s an affiliate can help to organize that particular zone,” he adds. “We’re going to be making calls to follow up with members who may not have renewed their membership from last year or are late in getting it in for this year. The ‘affiliate’ structure allows for someone who’s on the Board of Directors to actually speak from that position. It bodes well when someone gets a call from an official representative of AASP/MA.” Not surprisingly, the new Board’s increased emphasis on regional zone representation has led to a host of new faces. Already a longtime attendee of AASP/MA events, second-generation shop owner Jim Marshall (Marshall’s Autobody Experts; Billerica) is excited to now serve on the Board as a Zone 4 representative and have an increased opportunity to encourage prospective members to take advantage of everything the association provides.

“When you can be around other shop owners who have the desire to get better at their craft – and work on their businesses as opposed to in their businesses – I think it can only benefit the industry as a whole. I’m looking forward to recruiting some shops to join by meeting with them and explaining why [AASP/MA] is beneficial to them.”

On a personal level, Marshall is quick to praise AASP/MA for its ongoing efforts to inform member shops of state regulations that aid them in protecting the rights of their customers. He also stresses that regularly utilizing association-distributed information and participating in meetings and events will go a long way in building a stronger and more unified industry.

“Attend the meetings and go onto the AASP/MA website and use some of the resources that are available. I use them on a regular basis to bring that information to the insurance companies when there are questions about what is allowed and not allowed and what can and can’t be asked for.”

For fellow Zone 4 director and new Board member Paul Tuscano (Auto Body Builders, Inc.; Middleton), being active in AASP/MA means having greater access to industry-leading knowledge and training that would have been difficult to track down on his own. Not surprisingly, he fully intends to do his part to share these things with fellow members in his new role.

“We get a lot of phone calls from other shops for information, and I refer them right to the [AASP/MA] website […] With a lot of that information, you get reimbursed [for membership dues] on the first job if you utilize it correctly. It’s like a tool in your toolbox. If you use it correctly, it works; if it sits in the toolbox, it doesn’t.”

Before joining the Board as a new Zone 1 director, John Studer of Whitman Body Works (Abington) had already spent years as an

avid AASP/MA participant. As the state’s auto body community continues to grapple with everything from the Labor Rate to the financial demands of training and equipment, he sees tremendous value in devoting time away from his business to the association.

“If you’re either managing [the shop] or are an owner, finding the time for anything is tough. But everybody has to do their part […] You’ve got to get out there and try to move things forward and do whatever you can to help the industry out.”

While AASP/MA is clearly widening its reach at home, it also remains committed to having a presence on the national scene. In addition to its affiliation with AASP National, it will continue to attend and participate in the NORTHEAST® Automotive Services Show, SEMA and other out-of-state events to gain broader insight into how to better serve repairers in Massachusetts. Already a veteran of national trade shows himself, new Zone 1 director Dan Wenzel (Wenzel’s Auto Body; Bourne) is excited to see 2021 as a chance to use his experiences to assist shops closer to home.

Not surprisingly, the new Board’s increased emphasis on regional zone representation has led to a host of new faces.

“I noticed that the [previous AASP/MA] Board seemed to be doing a lot of good stuff over the last few years. It piqued my interest to where [my shop] began attending more meetings [...] I figured, ‘Why not get involved and see what we can do?’”

In Wenzel’s mind, the need for AASP/MA’s action and guidance is greater than ever.

“The industry is evolving at warp speed, whether it’s with construction materials in vehicles, scanning calibrations, electric vehicles – you name it […] Hopefully, we can educate each other peer to peer and pass it along to the rest of the industry. There’s just so much going on; it’s hard to pinpoint one [thing] or the other. I know that by just standing back and hoping that you figure it out, it’s going to pass you right by. You have to get up there and get involved.”

Although AASP/MA has entered the new year with the largest Board in its history, true progress will not come through the actions of 24 people alone. Every member of AASP/MA is needed to ensure the industry’s health and survival – especially in these trying economic times. Wenzel is hopeful that the restructured Board – and AASP/MA’s work in general – will inspire more industry professionals to roll up their sleeves and join the cause.

“Everyone has different motivation levels, [but] you kind of feed off other people. You think, ‘Hey, this person’s going the extra mile to do this. Why shouldn’t that be me or all of us?’”

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

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New England Automotive Report

February 2021 25

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EXECUTIVE DIRECTOR’S MESSAGE continued from pg. 10 state’s government legislative and executive branch leaders.

We ended 2020 with very positive meetings with Insurance Commissioner Anderson, Lt. Governor Polito and with Senate President Spilka’s office regarding our legislative package. Our proposed bill to move the Auto Damage Appraiser Licensing Board (ADALB) from its current position under the Division of Insurance to the Department of Professional Licensure has been well received by the nearly 20 senators we’ve met with, and many of them have written letters of support.

Our goal is to have this bill addressed early in the legislative session, which began last month. In addition, significant work has gone into the writing of a new “competitive prevailing labor reimbursement” bill, which was also filed in January 2021. Both bills will need assistance from you if we are to be successful in fueling the revolution. Much more will be made available to you regarding these two bills on our “Members Only” website portal. We will also be reaching out to the entire industry to join in this action, because it IS TIME FOR A REVOLUTION! You can choose to be a part of the process or part of the problem. If you continue to sit on the sidelines and simmer in the resentment, you will only be assisting in prolonging your own agony and struggle. Unlike the “Reign of Terror” in the late 1700s, we do not have to yell, “Off with their head!” We just need to stay focused on who those heads belong to and be

30 February 2021

New England Automotive Report

sure that the true tyrants are identified and made to answer for their misdeeds!

Maybe, just maybe, as Marie Antoinette said during the French Revolution, “Let them eat cake!” It is time to end “THE REIGN OF TERROR.”

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AASP/MA EXECUTIVE DIRECTOR EVANGELOS “LUCKY” PAPAGEORG can be reached at (617) 574-0741 or lucky@aaspma.org

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[AASP/MA] FEATURE continued from pg. 21 that all the adjustments required to improve comparability point in the same direction. They indicate that the actual level of collision repair Labor Rates needed to reflect the real value of these services significantly exceeds the observed arm’s-length level of hourly mechanical Labor Rates being paid in an uncontrolled free market setting.

Implications The evident fact that allowable Labor Rates for collision repair work controlled by auto insurers tend to be about half the observable level of free market mechanical Labor Rates suggests that auto insurers’ suppression of rates has been effective in paying much less for these services than their real economic worth. The methods of valuation used to reach this conclusion rely on well-established tax law and regulatory procedures employed across the globe in accord with international law and Organization for Economic Co-operation and Development (OECD) rules. The same methods apply to the valuation of other assets, such as artworks or real estate.

The undeniable implication is that the current level of auto insurercontrolled collision repair Labor Rates is well below what their level would be in an uncontrolled free market setting.

A Preview of the Next Two Articles The auto insurance industry justifies its suppression of Labor Rates with the claim that this system is efficient and reduces cost to consumers. Collision repair providers contend that this system is not efficient and involves an abuse of market power against the consumer and the collision repair industry. Many of the cases brought by collision shops against insurers have filed their complaints on the basis of fair trade and antitrust statutes.

Next month, I will address some general issues surrounding these conflicting claims of efficiency vs. market power regarding auto insurers’ economic effects on the collision repair industry.

The final article in this series will then report on an economic test of these arguments based on national Labor Rate data. The findings will be analyzed in an attempt to resolve the issue with a look at the geographical variability of collision repair Labor Rates.

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February 2021 31

[LEGAL] PERSPECTIVE by James A. Castleman, Esq.

Should You Encourage Your Customer to Use the Completed Work Claim Form?

It is an issue that I have covered in this column many times: No matter what a collision repair shop appraiser negotiates with their customer’s insurer, there is absolutely no obligation for the shop to perform the negotiated repairs or to perform them in the way that has been negotiated. It is solely the vehicle owner who has the final say as to what repairs are to be made. The decision is not up to the vehicle owner’s insurer or the body shop.

Under governing statutes and regulations and the insurance policy itself, an insurer is required to pay their insured the full cost to repair a damaged vehicle to pre-accident condition (minus only any applicable deductible and possible depreciation on some wear items) on a first-party collision or comprehensive insurance claim except in the case of a total loss. An insurance appraiser’s signature on their appraisal – whether or not negotiated with a repair shop appraiser – constitutes a certification by that appraiser, as a licensed professional, that everything on that appraisal is required to properly repair the vehicle.

No matter what the insurance appraiser writes and what the insurer pays, the insured still has the choice of what repairs to make, how they are to be made or whether they are to be made at all. If an insured decides not to have repairs made in accordance with an insurer’s appraisal and payment, then the insurer’s only recourse is to reduce the future insured actual cash value of the vehicle by the amount attributable to repairs that were not made. The insurer is not entitled to reimbursement for any payments that it has made, since its appraiser has certified that those repairs were necessary to return the vehicle to pre-accident condition. That is what the insurer was obligated to pay.

By the same token, a collision repair shop generally is entitled to get paid only for repairs that its customer authorizes in advance and the amount that its customer has agreed to in advance. It does not matter what the insurer’s appraisal says, what the shop has negotiated with the insurer and what repairs the vehicle may need.

It also does not matter whether a shop is a referral repair shop for an insurer, and it does not matter what the insurer’s referral contract says. Under Massachusetts law, ONLY the shop’s customer can authorize what repairs are to be made. It is a per se violation of Massachusetts consumer protection regulations for a repair shop to make and charge for any repairs that are not authorized in advance by its customer.

Why Is This Issue Being Raised Again?

Despite what the law is, some insurers just don’t get it. They believe that only they can dictate what repairs are to be made to their insureds’ vehicles, and they think that repair shops are obligated to make all repairs that repair shops negotiate with them.

I continue to get reports of insurers telling shops this – no matter how wrong the insurers may be and how many times the governing law has been explained to them.

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New England Automotive Report

This was brought home to me recently when I was told about one insurer vigorously arguing its wrongful position with an AASP/ MA member shop. As was reported to me in an email, “Even if there is no referral contract, [this insurer says] that they are the ones running the show [and] that any agreement with them during the appraisal negotiating process is a binding contract as to how the vehicle is to be repaired.” It bothers me that insurers still make these outrageous statements.

It also bothers me that it was the Massachusetts insurance industry itself that lobbied for the laws that allow its insureds to dictate what repairs are to be made, no matter what the insurers may have written or paid for. Further, the governing laws that allow this were enacted in 1988 – over 30 years ago! One would think that insurers would have learned by now.

Notably, for many years prior to 1988, insureds were required to have all repairs made that their insurer wrote and paid for. They also were required to have all repairs made that their repair shop negotiated with their insurer. In fact, the insurer was not required to pay for repairs until they were made and the insured certified on a so-called “Completed Work Claim Form” (CWCF) that all repairs had been made.

Once that form was received by the insurer, it then had to make payment within seven days. However, the insurer had the right to inspect the vehicle during those seven days in order to determine whether the repairs had been made in accordance with its appraisal. If the repairs had not been made, then the insurer could reduce its claim payment by the amount attributable to the unmade repairs. And if the insured did not submit a CWCF, then the insurer was not obligated to pay for repairs at all and was required to pay the insured only for the decrease in actual cash value of the insured’s vehicle attributable to the damage it incurred.

This prior system of auto damage claim settlement was unique to Massachusetts and had been legislated here at the instigation of the insurance industry. Insurers had perceived that they were paying for too many repairs that were not actually getting made, so they thought that they would be better off if all repairs had to be made. What insurers found out under the CWCF claim system, however, was that since payment was not being made until repairs were completed and since the insurers could inspect vehicles before making payment, all repairs were actually getting made. Further, they discovered that shops were negotiating more strongly for all repairs instead of just accepting what insurers were paying and then trying to find ways to effectuate alternative and less expensive repairs. This was necessary for the shops to be able to still make a profit and stay in business.

The end result was that insurers ended up paying more for repairs in Massachusetts than in all of the other states that did not have the CWCF system. When insurers realized this, they lobbied continued on pg. 37

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[LEGAL] PERSPECTIVE continued from pg. 32 for – and got – a change to the current “Direct Payment” auto damage claim system, hoping that they could again get away with paying for only partial repairs and that insureds would decide not to push the issue or have all repairs made.

Now, however, insurers are back to complaining that they don’t like it when they pay for repairs that are not made. Well, what do they really want? Do they want to pay more for repairs that actually do get made or less for repairs that may not get made? Apparently, they want it both ways, i.e., that they pay for only partial repairs but end up getting insureds and their shops to still perform full repairs.

As a result of all this, repair shops get stuck in the middle. They need to negotiate for everything that is truly required to repair a vehicle to pre-accident condition, but they also need to act at the direction of their customer as to what repairs are actually going to be made. Notably, under the Direct Payment system, it is not illegal for a repair shop to fail to charge a customer for their deductible – no matter what insurers may say – so long as the shop’s repair order and final bill reflect what work the shop actually performs. And a lot of customers don’t want to pay their deductible if they don’t have to.

Should You Encourage Your Customers to Use the Completed Work Claim Form?

What many people do not realize is that the CWCF system for auto damage claim settlement was never repealed and is still on the books. Under the governing statute, the Direct Payment system, which has become the almost universal standard, was enacted simply as an alternative claim payment system. Under applicable regulations, an insured can still insist that their claim be settled under the old CWCF system but must “refuse” any payment to be made by their insurer in order to do so. The regulation does not specify how such a “refusal” is to be made, but it certainly can be made prior to receipt of a claim payment under the Direct Payment system, which, according to the regulation, cannot be made prior to the time of provision of an appraisal by an insurer to its insured.

In my experience, it is also possible to return a payment already received and specifically request that an insured’s claim be settled under the CWCF system.

It may seem counterproductive to have your customer elect to use the old CWCF system and refuse or return a claim payment check, but it may be to your – and your customer’s – advantage in the right situation. After all, if the insurer is insisting that you are going to have to perform all repairs anyway and perhaps is threatening to not make full payment or to sue you for return of any “excess” payment that they perceive, what’s the difference if you use the CWCF system? It also gives you more power to convince your customer to actually authorize all repairs that you can negotiate.

Further, this could put you in a better bargaining position to get paid for everything that you truly need to repair a vehicle to preaccident condition. After all, if the insurer knows that you are going to have to perform all repairs, then there may be an incentive for them to actually pay for those repairs.

This tactic may be particularly attractive if you are dealing with a difficult insurer that wants to call all the shots and may not want to be bothered with a claim system it doesn’t know how to administer but which they legally will be required to use. Further,

as part of the negotiating process, the insurer may be put on notice that it could be placed into a position where they risk having to pay for additional substitute transportation – and maybe even additional storage – while you hold the vehicle in order to enforce your garagekeeper’s lien until you get paid after repairs are completed, which you legally can do.

Notably, the governing statute specifically says that your customer can direct that payments be made directly to their repair shop if they are using the CWCF system and that their insurer must abide by that direction. Moreover, if payment is not received within the seven-day window after submission of the CWCF, then your customer (or you if you take an Assignment of Rights from your customer) can sue the insurer for double the amount of the claim payment.

Conclusion It is time for insurers to understand what current law says and what it has said for over 30 years: Under the Direct Payment system, an insurer is required to pay for the full cost of repair of a damaged vehicle, but the insured is not required to have all such repairs actually made – no matter what an insurance appraiser may write and what a repair shop may negotiate with that appraiser. It is the customer alone who can authorize what repairs are to be made.

If an insurer wrongfully disagrees or otherwise gives you or your customer grief about the issue, maybe you should think about whether having your customer insist on the use of the CWCF system might be the appropriate thing to do. It often will not make sense to have your customer elect the CWCF system. But in certain situations, it may just be what you and your customer are looking for.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

Attorney James Castleman is a managing member of Paster, Rice & Castleman, LLC in Quincy, MA. He can be reached at (617) 472-3424 or at jcastleman@prclawoffice.com.

QUALITY STARTS WITH GENUINE GENESIS PARTS AND ACCESSORIES. Genesis of Norwood 391 Boston Providence Hwy Route 1, The Automile Norwood, MA 02062 Parts Line: 781-762-9210 Toll Free: 800-559-9210 bchwholesale@boch.com

New England Automotive Report

February 2021 37

BOLT ON NEW

38 February 2021

New England Automotive Report

0420_NEAR Hyundai Group Ad.qxp_Layout 1 3/12/20 1:51 PM Page 1

[LOCAL] NEWS continued from pg. 12 weights, lifting metal boxes to simulate jobs one may have and running with a 75-pound backpack.

“What we accomplished together always seemed to be the underlying goal. It was never, ‘I’m better than you.’ There was one woman who was already fit and could lift more than all of us.

Some were amazing runners. No one was competing, and we all worked together to make something bigger.”

An ideas person, Nesbitt has worn many hats throughout her career, which has been mainly focused on insurance and marketing. Currently, she is the owner of the marketing firm WAITT (“We’re All in This Together”). Through her work with AASP/MA, she has found that the relationship building she learned during the Women’s Strength Study applies to the body shop community. She reminds all to realize that they can work together by being part of the association.

“If every single body shop joined AASP/MA, they can work together, have the same attitude and collaborate.”

Looking back, Nesbitt recalls another important lesson she took away from being part of the study.

“Every woman was so different. Whatever their reason was, no one’s individual issues mattered as much as the collective goal of following the rules. They didn’t tell us to ‘lose weight;’ they wanted us to eat right and be healthy. They were clear on that. Just like with AASP/MA, the goal is to let people know about the real issues. We can get so hung up in our own day-to-day fight that we forget the big picture of what we can do together.”

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HERB CHAMBERS HYUNDAI 735 Southbridge Street Auburn, MA 01501 TOLL FREE: 800-767-1898 FAX: 508-832-6026 EMAIL: pobrien@herbchambers.com www.herbchambershyundaiofauburn.com

BOCH HYUNDAI 391 Boston Providence Hwy Route 1, The Automile Norwood, MA 02062 PARTS LINE: 781-762-9210 TOLL FREE: 800-559-9210 bchwholesale@boch.com

BALISE HYUNDAI 683 E. Columbus Ave. Springfield, MA 01105 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com

One Call, One Truck for Eleven Brands!

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

Get it right

from the source.

Ford and Lincoln Mercury dealers are the one-stop source for all of your collision repair needs.

When you need fascias, grilles, headlamps, wheels or any other Ford Motor Company Ge uine Part, call your local wholesaling dealership. They’re a great souce for technical and repair information as well. Using Genuine Parts can help your body shop reduce cycle time, improve relationships with insurance companies and satisfy customers. So get everything you need in just one call to your one-stop collision repair resource – your local Ford or Lincoln Mercury Dealership.

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© 2019, Ford Motor Company

New England Automotive Report

February 2021 39

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Check out MoparRepairConnection.com for resources, promotions and technical information. ©2020 FCA US LLC. All Rights Reserved. Chrysler, Dodge, Jeep, Ram, Mopar and SRT are registered trademarks of FCA US LLC.

40 February 2021

New England Automotive Report

NEAR_Collision_COL15.indd 1

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Contact these Nissan dealers for all your parts needs: Mastria Nissan 1305 New State Highway Raynham, MA 02767 Direct Toll Free: 800-248-2458 Direct Fax: 508-802-6118 E-mail: parts@mastrianissan.com Web: www.mastria.com

Kelly Nissan of Lynnfield 155 Andover Street Danvers, MA 01923 Toll Free: 800-698-9280 Fax: 781-598-8026 E-mail: BSherman@Kellyauto.com

Kelly Nissan of Woburn 155 Andover Street Danvers, MA 01923 Phone: 781-835-3510 Fax: 781-835-3580 E-mail: mbosma@kellyauto.com www.kellyauto.com

Balise Nissan of Warwick 1350 Post Rd. Warwick, RI 02888 TOLL FREE: 800-992-6220 FAX: 800-254-3544 wparts@baliseauto.com www.BaliseWholesaleParts.com One Call, One Truck for Eleven Brands!

Quirk Auto Dealers 115 E. Howard St. Quincy, MA 02169 Toll Free: 877-707-8475

New England Automotive Report

February 2021 41

EMPIRE AUTO PARTS

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ADVERTISERS’ INDEX Accudraft Paint Booths..................................................... OBC Audi Group............................................................................14 Balise Wholesale.....................................................................11 Best Chevrolet........................................................................16

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Boch Hyundai........................................................................11 Collision Supplies..................................................................36 Colonial Auto Group...............................................................2 Empire Auto Parts..................................................................42 Ford Group............................................................................39 Genesis of Norwood...............................................................37 Honda Group........................................................................26 Hyundai Group......................................................................39 Ira Subaru..............................................................................12

Wheel Collision Center Excellence in Wheel Sales and Repair

Patent assures 100% WHEEL INTEGRITY

Ira Toyota of Danvers.............................................................13 Kelly Automotive Group........................................................43 IBC Kia Group......................................................................36 Linder’s, Inc. .........................................................................33 Long Automotive Group........................................................27 Mazda Group...........................................................................8 McGovern Chrysler Jeep Dodge Ram....................................33

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1.800.292.RIMS (7467) 42 February 2021

New England Automotive Report

Nissan Group.........................................................................41

Reliable Automotive Equipment...................................... 22-23 Sarat Ford Lincoln..................................................................31 Sherwin Williams.....................................................................3 Spanesi...................................................................................28 Subaru Group........................................................................29 Toyota Group.........................................................................34 USI North America................................................................35 Volvo Group..........................................................................36 VW Group.............................................................................17 Wellesley Toyota/Scion...........................................................30 Wheel Collision Center..........................................................42

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KELLY Nissan Lynnfield 800.698.9280 Fax 781.598.8026

KELLY Nissan Woburn 781.835.3510 Fax 781.835.3580

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KELLY Nissan Lynnfield 800.698.9280 Fax 781.598.8026

KELLY Nissan Woburn 781.835.3510 Fax 781.835.3580

Commercial Vehicles

KELLY Jeep Chrysler Lynnfield 800.278.8558 Fax 781.581.2490

KELLY Honda Lynn 800.779.7466 Fax 781.595.2898

KELLY INFINITI Danvers 866.883.7093 Fax 978.750.6962

KELLY Volkswagen Danvers 888.426.5268 Fax 978.774.8007

KELLY Ford Beverly 978.922.0059 Fax 978.922.8508

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kellyauto.com

KELLY Ford Beverly 978.922.0059 Fax 978.922.8508