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Auto Glass Monopoly?

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  • Auto Glass Monopoly?


    By George Colli| Monday, Jul 7, 2014 | Updated 9:57 PM EDT

    At some point, most drivers will need to get their car windshield repaired or replaced.

    With mobile, at home or in-shop service available within days, if not hours, the state insurance department does not get many complaints from consumers.
    But it’s a different story if you ask any of the dozens of independent or family-run auto glass shops in Connecticut, many of which spoke out enough that state legislators passed a new law.

    Public Act 13-67, An Act Concerning Automotive Glass Work, became effective at the start of 2014 and is meant to protect independent companies from having business steered to larger, out-of-state companies.

    Before the law even took effect, one international company filed an injunction to halt its implementation: Safelite Group, LLC.

    The Ohio-based company consists of the nation’s largest third-party administrator, Safelite Solutions and the largest auto glass company, Safelite Auto Glass.

    Third-party administrators are contracted by insurance companies to handle auto glass claims, and a majority of the nation’s insurance companies use Safelite Solutions.

    Company representatives say they agree with the law requiring them to notify consumers that they have the right to choose who performs the work. They claim they already do.

    heir issue is with the provision that states the company must provide the name of a competitor if an offer is made to the consumer to use Safelite Auto Glass.

    “We strongly feel this violates our First Amendment right to free speech,” said Brian M. DiMasi, Safelite Group Senior Corporate Counsel. “That is why we are challenging it.”

    Now, all industry eyes are on the Constitution State and the outcome of a pending Second Circuit Court of Appeals decision.

    While Safelite representatives attest they are complying with the law, the NBC Connecticut Troubleshooters found that may not be the case.

    Steven Petrauskas, a Goshen resident, said he requested to have Plymouth Glass and Mirror in nearby Thomaston perform the windshield replacement on his truck, but Safelite Solutions set him up with an appointment at a Safelite Auto Glass shop in the Hartford area, more than an hour away.

    “I spelled Plymouth. I spelled Thomaston for her. I explained her that I wanted that company and they still made the appointment with Safelite. I didn’t get it,” said Petrauskas.

    After complaining to his insurance company and to Safelite Solutions, Petrauskas eventually had the work done at Plymouth Glass and Mirror.

    But this is a common issue, according to Nikki Maloid, whose family has owned the company since the early 1980s.

    “Our customers are telling us they’re being pushed to a specific company – Safelite Auto Glass. They’re being told that they need to use this company, or they may not be covered under warranty,” said Maloid.

    Safelite did issue a response to the Petrauskas complaint: “We are aware of the complaint from Mr. Petrauskas and are investigating what took place. While Safelite Solutions dedicates significant resources in training its CSRs, sometimes human error may occur and that is what we believed happened here.” Gerard O’Sullivan, the Director of Consumer Affairs for the Department of Insurance, acknowledged that the company has not had many complaints from consumers regarding business steering in the auto glass repair and replacement industry. He said the department holds insurance companies responsible for any action takes by a third party administrator.

    O'Sullivan noted that the department has posted signs at auto body shops for years, displaying their contact information for anyone who may feel their being pushed to one business or another. “Steering is difficult to prove,” O’Sullivan said. “We’ll look at phone scripts that companies use and make sure they’re in compliance and following state insurance laws and regulations.” Along with the attempt at an injunction, the Safelite Group, LLC has also sued Attorney General George Jepsen and Insurance Commissioner Thomas Leonardi.

    Jaclyn Falkowski, spokesperson for the attorney general, released the following statement: "The state has a long-standing interest in protecting consumer choice in automobile glass repairs covered by insurance. We believe the federal District Court's decision upholding the law was thorough, and correct. We will continue to defend the statute."

    The Second Circuit Court of Appeals heard oral arguments in the case last month. The lower courts have already ruled in favor of the state, but Safelite Group is hoping the Second Circuit Court will overturn those decisions.

    The future of small mom-and-pop auto glass shops may just hang in the balance.

  • #2
    The IGA along with Independent glass shops in Minnesota have been talking to legislators and the Commerce department to try to stop these violations against consumers and the independent shops that service them. Hopefully before long the constant beating of the drums will be heard and action will be taken against insurers and the TPA's that "thumb their noses" at those that are in charge of insurance enforcement and the statutes in place to protect consumer choice in Minnesota as well.


    • #3
      Well, it seems that my post below was deemed to be SPAM, on the AGRR board, and it wouldn't allow it to be posted. Fine, I'll post it here instead, my response to the "industry reaction to the investigative report", or more directly, to the whole scenario playing out in CT.

      Since one keen reader grasped the significance of “laymen’s terms” in the midst of all of this, let’s stop for a moment and focus on the fact that the legislature/lawmakers in CT, the Insurance Department, the AG’s office, Safelite, shops, and consumers, have all at least partially, missed the mark on the issue at hand, with some, of course quite deliberately so.

      The issue of “commercial free speech” is completely misdirecting. The issue of steering is, in part, correct, but not fully. The issue of recommending shops by insurers is equally incomplete, from both the TPA’s standpoint, and the independent shop’s standpoint. The defense of the law by the AG’s office to “promote consumer choice” is only partially correct, but that’s the law that was written, so at least they’re trying.

      To put this into laymen’s terms, that anyone at all can understand, is this simple, and no, I personally can’t take credit for this simply analysis:

      If any person deciding to shop at a local corner store, or any store for that matter, had to FIRST call for “approval” (make no mistake, we’re talking about APPROVAL, it’s IN the scripts) to buy a product at the shop of their choice from, for example, WalMart, BEFORE buying that product, giving WalMart the opportunity to market that consumer with their own wares after being “notified” of a consumer with intent to make a purchase, complete with name, address, phone, and email contact of that customer, WE WOULD NOT BE HAVING THIS DISCUSSION, THIS LAW, THIS LAWSUIT, OR WASTING BREATH EVEN DEBATING IT. Everyone touched by such a scenario would be outraged.

      Yet here we are, and all because an insurance company is involved some how, under the guise of “approval of a claim” even though they have no legal rights to exercise over the consumer’s property without clearly invoking that option under any contractual provisions in the policy and notifying the insured consumer of such, which they DO NOT DO, and HAVE NOT SOLD any type of an HMO or PPO policy to the consumer, either. AND IT IS EQUALLY IMPORTANT TO NOTE HERE that NO insurer is suing over this law, only Safelite. Does NO one find that important?

      The consumer contracts for the repairs to the car with the repair provider. The consumer contracts for insurance indemnity with the insurer. NEVER the two contracts shall meet, until or unless the insurer CHOOSES TO CONTRACT FOR THE REPAIRS TO THE PROPERTY.

      As to the “human error” comment, judging by the mounting evidence we have documented, I would have to opine that either the “significant resources dedicated to training…CSR’s” is working exactly as that training was designed to do, or they’ve got a whole bunch of rogue employees on their hands that didn’t pay attention in school, and so does every other TPA out there, without exception.

      As always, this is Just My Honest Non Legal Opinion (JMHNLO), but it’s not just mine, it’s been to the steps of the US Supreme Court, and I can read.

      I have gone out to look for myself. If I should return before I get back, please, hold me until I get here.


      • #4
        We have NBC with the story. It would be a real shame if the IGA & NWRA and all the non-Safelite glass shops didn't take advantage of this. I have already communicated with the reporter and here is his email address If everyone would send him a brief note, we might get the story to go nationwide which may be enough to get the FTC involved.
        So, Gary please put out a call to action.