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Thursday, 24 October 2013 22:11

Michael Bradshaw, NC Shop Owner, Updates the Shortpay Arbitration Outcome

In July 2013, Michael Bradshaw, VP of Operations at K&M Collision in Hickory, NC, was victorious in his court-ordered arbitration against Nationwide for a short-pay lawsuit filed on behalf of a body shop customer. The underpayments were determined to be reasonable and necessary repair costs, but the problem continues as Bradshaw notes that this issue is quite common with several specific insurers, including Nationwide and GEICO.

Currently, Bradshaw is pursuing six short-pay cases against Nationwide, three against GEICO, and one against All-State. Still, his pursuit of full payment has not impacted these insurers’ practices. Bradshaw notes, “they come out and refuse to pay for the same things they just lost. Their attitude is ‘sue us again,’ and I do.”

On a positive note, Bradshaw says that some other insurers who are aware of his short-pay cases have "chosen to do the right thing and pay the full repair bill because they know they'll get tied up in the same litigation if they don't."

In Bradshaw's July victory against Nationwide, the insurer’s short-pays included: labor rates ($48 Body & Refinish, $80 Mechanical and $65 Frame), procedures (i.e. sand and buff, final detail, road test, color tint and collision access time), invoiced paint & materials, sublet markup, fixture usage and a $250 Damage Analysis fee which included a comprehensive part by part inspection of all components including: exterior panels, inner structure, mechanical components and SRS and seat belt systems. The award also included storage charges at a rate of $50 per day for the total amount of $2,506.98 plus accrued interest until the insurer’s full payment is made.

“I’m glad the courts recognized whom the repair experts were.” says Bradshaw. “From the beginning I was very confident we would succeed through our legal system in proving all our charges to be both reasonable and necessary. For any insurer to expect all shops to operate by the same rates, procedures and charges regardless of training, manufacturer certifications, equipment and facilities is ludicrous. The fact is we have made a commitment to repairing vehicles properly, adhering strictly to all manufacturer repair methods and guidelines and what we’re consistently finding with some insurers is they care very little about manufacturer certifications and proper repairs and only about bottom line cost and the cheapest repairs possible. My Father (CEO) and I decided if we were going to stay in business and continue to repair vehicles properly we could no longer accept insurer dictated repair costs. We found that short-pay litigation was necessary to stop insurer underpayments and provide our customers with the factory certified repairs their policy affords them.”

Bradshaw credited assistance and advice from Erica Eversman, Ray Gunder, Barrett Smith and many other industry experts as well as his legal team of Jason A. Orndoff and William E. Morgan for his legal victory.

Bradshaw admits that there are challenges to pursuing short-pay cases, such as the difficulty of waiting to receive the money rightfully owed to him. He also notes that there has been a great deal of pushback from certain insurers who go out of their way to steer customers to other shops.

“I hope our actions and results encourage other quality-minded repairers to seek similar actions against the less than ethical insurers. We learned a great deal in this initial case and I have had to embark on two more cases against Nationwide for short-pays in the amounts of $5,663.24 and $10,135.52. I’m confident we will prevail as I know we are in the right. I know such actions are necessary to stop such behavior and to best serve our community members, our employees and our company,” Bradshaw said. “We’ll continue to share our efforts with others so they may know that they no longer have to accept insurer dictation of repairs, rates, materials and charges.”

Bradshaw hopes that his victories in pursuing short-pay cases "will make it easier for other shops to pursue them. Maybe we'll even get to the point where the insurance companies just do the right thing instead of forcing shops to pursue litigation in order to get paid what they are rightfully owed."

For shop owners interested in pursuing a short-pay case, Bradshaw advises you to start by finding a knowledgeable attorney who is willing to learn about the collision repair industry and to consult with other attorneys across the country. It is also imperative that you are "meticulous in your documentation, especially the repair contract."

Bradshaw believes that the solution to preventing such lawsuits from being necessary is multi-faceted. First, it must begin by "educating shop owners and their personnel as it relates to what is necessary for proper repairs and how to bill accordingly. Because many shops don't do this, the ones who do look like the bad guy to the insurers."

Next, more legislation is needed to dictate what the insurance companies are required to do when paying for a loss. Finally, consumer education is key; "we need to teach consumers to purchase proper insurance coverage from a carrier who will reimburse them fairly in the event of a loss."

Bradshaw has quite a lot going on in the next few months. One suit against Nationwide involves a vehicle which was declared a total loss midway through the repair, and Bradshaw is in the midst of a battle to receive payment for the work completed thus far.

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