Volume 11, Issue 2 - March/April 2009

Insurance Talk
policy briefs

Minnesota Supreme Court Hears Assignment of Benefits Arguments

The Minnesota Supreme Court heard arguments in early January from both industry attorney Chuck Lloyd of Livgard and Lloyd and counsel for Lansing, Mich.-based Auto Owners Insurance et al. regarding the Court of Appeals’ 2008 ruling that a “non-assignment” clause in an insurance policy protects insurers from having to deal directly with auto glass shops.

The case involves three different Minnesota-based auto glass shops, Auto Glass Express, Archer Auto Glass and Star Windshield Repair.

Lloyd, who is an AGRR columnist (see page 10), argued that the assignment of benefits clause is an underwriting issue, rather than one involving auto glass claims.

“What the anti-assignment clause is designed to protect is to protect [policyholders] from not doing business with those they don’t want to do business with,” he said.

The insurers’ counsel argued that the real issue in the case is short payments—and a “concern over cost containment.”

“The adjusted loss has already been paid,” the company’s representative argued. “The dispute is the amount over [this].”

In his counter argument, Lloyd argued that whether or not the invoice and what the insurance company might pay is inapplicable to whether the assignment of proceeds should be allowed.

“They want to dispute the amount, but that doesn’t change the assignment of the debt,” Lloyd said.

The case originated from four different cases, three of which involved arbitrations related to short payments. In these cases, the arbitrators ruled in favor of the glass shops in the short payment disputes, but the insurers filed arbitration afterwards arguing that the assignment of payment to the glass shops had been invalid due to the non-assignment policies present in the insureds’ policies. In the fourth case, Star Windshield Repair attempted to arbitrate short payments against Auto Owners; in turn, Auto Owners filed a declaratory-judgment action “seeking a declaration that the non-assignment clause in its insurance contract prevented the customers from assigning the payment to Star Windshield.”

At press time, the court had not yet made a ruling on the case.

Coccaro Details Repair Job that Led to Progressive Suit

Northstate Custom Auto Body owner Greg Coccaro told about the repair job that led to a three-year-plus lawsuit involving Progressive Insurance, and provided tips for avoiding—or at least protecting oneself—in such a situation during a presentation in Baltimore in late January. The presentation was a part of a meeting conducted by the Washington Metropolitan Auto Body Association.

Coccaro’s shop had repaired a 2004 Mercedes Benz for a customer the year the vehicle was purchased, after the customer had run over a rock wall and garden in her yard. When Progressive’s estimate came in much lower than North State’s, Coccaro advised the insured, who still wanted his shop to do the work based on its specialty in dealing with foreign high-end cars. Coccaro said he could do the work but she’d be responsible for the charges.

Eventually, another adjuster came out to see the vehicle and after several phone calls, Coccaro recounted that he received a call from Progressive saying the company would pay the claim in full, and he received a check for $34,090, along with a post-estimate written detailing the work completed.

After six weeks passed, Coccaro received a summons and a complaint filed against him, alleging that the company had defrauded the company; had provided phony invoices; that Coccaro himself had directed a conspiracy to defraud Progressive; and had charged the plaintiff for non-existing damage.

Ultimately, after three years of discovery and other court dealings, the case went to trial, where the judge threw it out of court before it went to the jury, noting that it was “a [Progressive] business decision to pay North Star.”

Coccaro encouraged others in automotive repair shops to maintain good documentation and stressed the importance of researching call-recording laws and, if legal, to record calls with both insurers and customers.

Currently, Coccaro is involved in a suit of his own filing, also against Progressive; originally, steering was one of the accusations in the case, but he said it was removed as in New York, it’s an offense that would be covered by state regulations. However, several causes of action remain in the case. These are: tortuous interference; engaging in deceptive business practices; and spreading injurious falsehoods about his business.

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