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I'd like to make a few points, ask a few questions, and hopefully, we will ALL be able to learn something from the information that I am looking for.
This may get long, (as usual!) so hang in there with me!
Point 1 - DISCUSSING PRICING
Supposedly, we are not to discuss pricing with each other as business owners and/or glass companies...... although the Networks and Insurance Carriers can because of some "exception".
REQUESTED ACTION: Can someone on this board, or with the IGA, NGA, or AGRSS, clearly, put into print for all of us to read, interpret and understand, why the above is so? I'm actually looking for both sides of the equation ...... 1)the law that states why we cannot discuss pricing, and 2)the law that says it's o.k. for the Insurance Companies to do so.
I'd like to see the actual NAME OF THE LAW and all of the SPECIFIC language it includes, that says we, as independent business owners, cannot discuss pricing ISSUES OR CONCERNS without breaking the law.
When I'm at an Industry convention and simply discussing pricing and discounting issues with other industry people, there always seems to be that person that pipes in because they like to sound all "legal" by saying "hey, we shouldn't be talking about this".
Give me a break!
PLEASE, SOMEONE GIVE US SOME SPECIFIC LANGUAGE, OR BETTER YET, THE ACTUAL NAME OF THE LAW, AND THE ACCOMPANYING LEGALESE! I'D LOVE TO READ THRU IT.
I understand that we can't say, "hey, let's all raise our prices to this figure at the same time", as THAT would be price fixing.
None of us could do that right now anyway! You can charge whatever you want, but getting paid for what you charge is the current problem.
Again, I'm not looking for the generic "we can't because the law says so" answer.
I think it would be great for our "Industry Education" to be able to have the specifics.
My gears have been turning a lot lately, and I think I may have a few ideas about how to make an impact on the Networks. I just need to make certain that everything is "legal" before I share the idea with all of you!
Tim, you are correct on a couple of points, but off on a couple also.
You are looking for the Sherman Anti-trust Act, first, and retailers can discuss pricing all day long. Getting together and agreeing to SET prices, or territories, or discounts and such, is the NO-NO.
Second, Insurers are not free from anti-trust law at the federal level. The McCarran Fergusson (sp?) act of 1945 passed anti-trust control of insurers to the STATE level, BUT the feds retain the right to enforce the federal anti-trust laws in cases of, and I quote, "Intimidation, Boycott, and Coercion". And they are certainly not exempted from anti-trust at any level for actions OUTSIDE the business of insurance. (recall they are NOT contracting to REPAIR CARS)
Now, getting them TO enforce them at the federal level is another matter. (stop giggling Hal, no one has given up on that front)
Finally, price fixing is not 'OK' for insurers. As I read the commentary(s) from 1945 and many recent ones, insurers were granted the ability to share information used for rate making in a specific area. One insurer would do the research, costly research, then sell the data to their direct competitor to offset the costs of the research. It wasn't about them sharing rate info, (though this is done daily in all biz) or about setting thresholds for rates to consumers.
Of course this is only aspect of McCarran, and McCarran as a whole has been under fire for some years about being time to reform it. Some insurers like the idea of federal regulation, others don't. That's a long story and one we are watching closely, especially NCOIL.
Would someone from one of the Industry Magazines please consider printing, in one of your future issues, the ENTIRE "Sherman Anti-Trust Act"?
I believe this would be valuable use of space in the magazine.
The more people learn about things like this, the better off we'll all be. The more eyes and minds that can absorb this information, the better chance there is that someone will come up with a different angle or interpretation.
I would also ask the same magazine that runs this article to include the entire McCarran-Ferguson Act of 1945 that Mark refers to.
By better educating ourselves about these "laws" we will be improving our Industry knowledge and professionalism.
I hope that everybody on this site takes the opportunity to print those off and read thru them.
It's easy to sit there in conversation and nod and say mmhmmm when people are discussing these laws, but now everyone really has a chance to get a hard copy in their files and truly understand the laws, and how they can apply to our industry.
How can it truly not involve the government if they refuse to give you the assignment if you don't agree to their pricing? That in itself is price fixing. Also with the drastic nags changes, that is a considerable change in the amount they insurance companies/tpa's pay for just the part. Loss of revenue for parts purchased. That should be illigal. There is a phrase on the Clayton Act on Sec. 13 near the end that reads: That nothing herein contained shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade: And provided further, That nothing herein contained shall prevent price changes from time to time where in response to changing conditions affecting the market for or the marketability of the goods....
Gee is SGC getting "Bona fide" customers? Or are they just stealing them from the shops the customer thought they were asking for?
There is no law against establishing a "suggested" retail price.(Let's say..NAGS x 2) It could then be published (on the internet..it is now a public record)...and..as a business owner, you can decide whether to use it or not.
Read this, then re-consider. It's written by one of the sharpest lawyers serving the collision industry.
Focus on three options in the policy, mixing of options (not allowed), and the case cites to back his research up. (Especially the one from State Farm, then perhaps we'll all better understand why customer choice is so important to their campaign. It's got nothing to do with quality, it has to do with them sidestepping the liability while they enjoy the price control.)
Print it, save it, and read it several times if you have to. I get more out of it each time I read it. It's VERY well done, and has not been disputed.
Someone else did comment. Copied from another board. Read on:
I just hope your observation regarding this site’s readers is accurate. Anyway, grab a snack, this is going to take some time.
Let me begin by stating that I have nothing but respect for Mr. McGuire and his admirable efforts on behalf of an industry that seems to have so few advocates. However, like much of the progressive leadership of the Collision Industry, he seems mired in a time warp wherein he gamely presents a strategy designed to “win” battles fought long ago, in a different legal and regulatory environment…albeit at the time successfully. In other words, his message is “old news”. And my apologies to those championing the efforts of Mr. Lynas, his message was decade or so too late when he was espousing it. More on this point will be covered below.
If there is one thing that I have been trying to impart on this Board is that Insurers do not live in the past, and more importantly learn from their missteps. Rarely do we witness them making the same mistake twice. Furthermore, and this is what makes them so formidable, they build upon their successes by anticipating challenges and/or seeking to expand their victories (when appropriate) to ensure that future challenges are all but unsuccessful.
Let me give an example. Although there are many to choose from, I’ll use a recent matter. Remember the all the hoopla surrounding Georgia’s Mabry Decision? Does anyone recall what Allstate (and others) did after that court ruling was announced? It settled, some would say expeditiously. Why? Of course it can be argued that pursuing the matter further would have been foolish; after all the court had made a ruling. However, others might argue that although it had different arguments and a slightly different policy, rather than pursuing its legal position (and possibly risking making matters worse…for them anyway) it reviewed State Farm’s approach and decided to take a different track. It settled. Again why? Possibly because the Mabry decision crafted a huge hole that almost every insurer has since exploited. You see, this decision hinged on contract language and the court all but told the world that had the contract wording been different, its ruling might also have been. So insurers, led by Allstate stopped and said, “Whoa, why fight this? Here in Georgia, all we have to do is pay a few dollars to the screwed insureds that made claims over the past six years; change the policy wording (which was already in the works) and it will be business as usual. Besides if we take this approach, all we have to worry about is this rather weak holding when dealing with the other first party DV lawsuits pending across the country. Better yet, with regard to those good arguments we had ready for our Georgia case, we can save them for these other cases.” And what has happened since? All but a handful of states have approved contract language limiting DV claims, including Georgia. Ironically, in some state filings, Mabry dicta has been cited. As for those pending lawsuits, I believe all but one were won by insurers. And the one victory in Indiana is up on appeal, with another Indiana case already holding exactly the opposite. Furthermore, now that Meridian is receiving help from some of its more powerful friends, care to hazard a guess as to how that one will turn out?
The point I am trying to make here is that when it comes to court challenges, or any holdings there from, unlike the repair industry, insurers coordinate their response. Their associations, pretty much directed by the largest players, are so disciplined that all challenges, regardless of where they arise, are pretty much handled by rote. This capability is probably one of the most significant benefits of it anti-trust exemption. It also doesn’t hurt that each of these representative groups have very focused sub-committees that meet regularly to discuss “issues”; and whose members are “experts”, both technically and legally. On the other hand, coordinated efforts arising from the repair industry are all but non-existent. And those that do occur, in my opinion, underestimate insurer reaction and preparation; thereby wasting valuable political and supporter capital, as well as time and resources. But that’s a subject for another time and thread. Let’s continue with Patrick’s piece.
His first premise is, in my opinion, accurate. With the exception of Progressive, no insurer wishes to incur any of the liabilities associated with repairing vehicles. Even Progressive’s legal beagles would probably argue that they have minimized their exposure with how they have structured their Concierge program (LOL). Mr. McGuire is also, for the most part, correct with his description of policy Payment of Loss (POL) provisions. However, he is absolutely wrong when he states that the “repair” option is what gave rise to DRP relationships. Actually, it was the first option (payment) that supported the genesis of these relationships. As has been stated by many hereon, they were and are used as a means to control costs (payments). If an insurer can find some repairer to back up their “offer of settlement”, they are sitting pretty.
Again with the possible exception of Progressive, no insurer is interested in availing themselves of the “repair” option…not even Allstate. So, there is no more “playing both sides of the fence”. DRPs serve only one purpose. They are a means to control/manage loss payments. In fact with respect to Progressive’s Concierge program, some might argue that the company is merely attempting to maximize its opportunity to do this.
As for Mr. McGuire’s comments regarding the statistics he cites (from BodyShop Business), I will only state that since the validity of these figures cannot be established, any one can make what they want of them. I will say, however, that intuitively the comments regarding DRPs now being more concerned about “steering” seems to make sense. And Rocco’s (and others) comments about how they have no one to blame but themselves seems equally accurate.
All right, let’s talk about the “strategy”. If one could even find a consumer to make the request (to ask which payment option an insurer is exercising), it is doubtful that an insurer will put its decision in writing. Why? Because, as I mentioned earlier, no insurer wishes to exploit the “repair” option. And as Pat correctly points out, if an insurer refuses to make an election, “payment” will be presumed…which again is just fine with all insurers.
Now, with respect to the commentary regarding the POL provisions, I have a couple words of caution. First, while POLs may still be similar in most Property and Casualty policies, this is changing with more “readable”, insurer and “line of business” specific policies being introduced. This trend is the direct result of more and more states deregulating their policy form review process (I believe Texas was the latest.). Twenty years ago, this wasn’t an issue.
Second, in even those cases where POL provisions have not changed, it is almost a certainty that the remaining contract, legal and regulatory environment has. Thus to “mix and match” case holdings between different lines of business (here Auto and Commercial Property) is very risky, especially when attempting to use cases 35 or more years old. It cannot be stressed enough how fluid the legal situation in each state can be. Information printed today could be out-of-date tomorrow because of a new court case, a new statute in response to a court decision, new policy language or an administrative ruling by the state insurance department. As an example, for the liability avoidance reasons mentioned above, in first party physical damage claim situations I would argue the Howard case is now moot.
Furthermore, the Keystone case has been all but abrogated by subsequent automobile insurance contract, statutory and regulatory changes. In fact this case, while not overturned, appears to no longer be legally viable even in Pennsylvania. There, through statute and regulation, not only does an auto insurer have a legal right to prepare an estimate, about eight years ago it became okay for insurers to provide the names of one or two shops that will allegedly perform the repairs for the amount estimated (am I right Fred?). And this is pretty much the case countrywide. In first party situations insurers have the right to not only prepare estimates, but also to not pay more than what they can prove to be the lowest cost (Here again is where DRPs play a role). In fact, in some states (Minnesota comes to mind), it is now possible for an insurer to demand that a first party insured visit one of its DRPs to have an estimate prepared. Can anyone guess what insurers pay there? If you disagree with what I have stated, please provide me one current case (last ten years or so), one regulation, one statute from any state that prohibits, in payment situations, an automobile insurer from preparing an estimate. If this can’t be done, there may be a more serious future concern to be worried about. But again, that concern is for another time.
What does the immediate forgoing mean? With the possible exception of Massachusetts (which is under insurer assault), insurers can legally recommend shops without having to provide any written assurance that they will accept direct liability for the quality and safety of repairs. Is this fair? Hardly! But it is presently legal. Those insurers that do offer warranties (either because they wish to do so for marketing reasons or because of a few states that require these) have drafted them so carefully, they that they are all but meaningless. This is not to say that to avoid regulatory or legislative scrutiny, a given insurer isn’t above twisting the arm of a DRP surrogate to placate a disgruntled policyholder (or claimant for that matter).
As for the Mockmore case, it is still operative. However to underscore my premise, its holding is probably better understood by insurers than most attorneys. The reason is simple: to avoid its sanctions. In fact, has anyone heard of any insurer in Illinois or anywhere else (other states have similar holdings) in the almost twenty years since it was decided, running afoul of its prohibitions? I ask this question to underscore my earlier point that even Mr. Lynas was a decade or so too late.
As for the “letter”, every large insurer has a form letter response to address this situation. In fact, many send it out immediately upon the claim being reported. So, even if you could convince a policy holder to submit Patrick’s letter, it is likely that he/she will already have one that spells out that the insurer is not only electing the “payment” option, but also clearly stating that it (the insurer) will, in some form or fashion. limit payment pursuant to the policy provisions as they interpret them. If not, this will surely be the response.
Fred, aren’t you glad you asked? Take solace though, there are some that firmly believe I do not know what I am talking about. Maybe they are right.
In any case, and for what it is worth, I also agree with the comments that handing out copies of this article is perfectly fine. Furthermore, if it energizes or reenergizes those that may need a “boost”, it has served its purpose and God Bless Mr. McGuire.
If the insurance companys & networks can dictate to use pricing based soley on thier fair market analysis, then would'nt these laws effect them? I read the first paragraph of the Clayton Antitrust Act. & they are breaking the law according to this act. I'm not a lawyer or would ever want to be but perhaps this would be some way in ridding these networks of the burden of PRICE FIXING!