Twitter You Tube Facebook Autobodynews Linked In

Friday, 30 June 2006 17:00

Shops question why Progressive doesnt have BAR registration

With the opening of the first Concierge Program service center in California, located in San Diego, Progressive Insurance has created a furor over what type of collision repair activities require registration with the Bureau of Automotive Repair (BAR) and reopened the question of whether an insurer can stand in the shoes of its insured in negotiating and authorizing collision repairs. 

The issue revolves around the Concierge Program service center, operated by Progressive employees, where insureds bring their collision-damaged vehicles, pick up their rental cars, and then return to pick up their vehicles when the repairs are completed. The service center awards the actual repairs to local body shops.

On the surface it's a very consumer- friendly program, but is it operating within the laws set forth by California Business & Professions Code (B&P Code) and should it be subject to regulation by the Bureau of Automotive Repair?

The Concierge Program service center doesn't have a hammer and dolly, a frame rack or a paint booth. But they do have hand and pneumatic tools and lifts to inspect vehicles, and they have been observed disassembling or tearing down vehicles to inspect damage. That's an activity that many in the industry say requires BAR registration.

News and

Analysis 

In fact, Section 3353 (d) of the California Code of Regulations specifically refers to "tear down" and says it means the act of disassembly, and that if a tear down is necessary to prepare a written estimate, the dealer shall first give the customer a written estimated price for the tear down. While the Progressive customer surely understands that they are leaving their car to be inspected and repaired, reliable sources confirm that the tear down is done without the type of signed work order required by BAR regulations.

Progressive will say only that it complies with the law. After the damage inspection is completed, Progressive selects a shop to do the work. The customer is notified as to what shop will be repairing the car, and that shop prepares a work order for the customer to sign. That the customer has the right to a repair shop of his or her choosing is unquestioned - and Progressive may even inform its customers of that right, we don't know - but what is the likelihood that a customer will opt out of the Progressive-selected shop at this point?

BAR evaluating situation

What is the BAR doing about this? "We are aware of and in the process of evaluating the situation," said BAR spokesman Miles Bristow. "We are aware of [industry] concerns and take them seriously. We're looking into this very carefully."

For this story, Autobody News submitted several very specific questions to the BAR concerning BAR registration requirements and BAR regulations for registered (licensed) shops. We were told that answering those questions now "would be speculative and premature. Prior to our investigation being completed and a determination made, we can't answer those questions. The priority for the bureau is doing the right thing," Bristow concluded.

Autobody News also spoke to BAR field personnel who, speaking on condition of anonymity, confirmed that the BAR is actively investigating the situation. One source told Autobody News that a big issue is that of compensation for the diagnostic work done at the Concierge Service Center. "The regulations require a license only when you charge for automotive repair work. They contend that they're not charging for it." He drew the analogy to independent used car dealers, many of whom don't have a BAR registration, but clearly do repair work when customers return used vehicles under warranty. "Those guys also say they don't charge for the work and don't need to be registered."

Industry opponents contend that Progressive is indeed "charging" for the work because the service center tear down is paid for by insureds with their policy dollars.

{mospagebreak} 

Why not get a license?

So why doesn't Progressive simply register with the BAR and end the discussion? "Probably because they would then be subject to BAR regulations," said California Autobody Association Exec-utive Director David McClune last month. Chief among those regulations are a customer's specific authorization for tear down work, subsequent repairs, and any supplements to the original repair estimate. Progressive was the force behind a recent bill in the California Assembly, AB 303, that would have allowed the insurer to stand in the shoes of its insured and authorize repairs. Current California law stipulates that only the vehicle owner or agent - which agent cannot be an insurance company - can authorize repairs.

If the BAR does decide that Progressive should be registered, forcing that registration could be a lengthy affair. "First, the BAR would give them a letter stating that they are in violation of the law," explained Allen Wood, a 33-year veteran of the BAR who was manager of the enforcement program until his retirement in July 2005. "With that letter comes the opportunity to register the shop and avoid any penalties."

If the repair shop fails to promptly register, then the BAR contacts the county district attorney to prosecute the matter. It is a misdemeanor to operate without a valid registration. And speaking of misdemeanors, B&P Code section 125 also makes it a crime for a licensed/ registered shop to act as the "agent or partner" of an unlicensed party, calling into question whether the 14 or so shops that do repairs for the Concierge program in San Diego might have some legal culpability if Progressive is found to be in violation of the law.

Don't hold your breath

Wood doesn't foresee the BAR taking immediate action against Progressive. "It's very political. Just for example, the Personal Insurance Federation (PIF) used to be run by Dan Dunmoyer, who now works for [Governor Arnold] Schwarzenegger." PIF is a trade association of insurers, including Progressive, that sell insurance to California consumers. Dunmoyer left PIF to become Deputy Chief of Staff for Policy Development for the governor. "The policy staff indirectly gives direction to state agencies such as the BAR," noted Wood, who said that the increasingly political atmosphere surrounding enforcement at the BAR had prompted his retirement.

Waiting for the BAR to take action seems like a slow boat to nowhere for some San Diego shop owners. They're talking about bringing a civil suit based on the unfair competition clause of the B&P Code. Known as Section 17200, this was the code section used two years ago by a small number of unscrupulous attorneys to sue over a thousand auto repair shops that failed to have current BAR registrations or had committed some other small infraction of BAR rules. This time, it could be the repair shops doing the suing.

 

Read 2067 times