There is No Excuse!

For far too many years, there has been an attitude in collision repair that because the “game” is rigged and controlled by insurers – to the detriment of the vehicle owner and the collision repair industry – it is okay to bend the rules, maybe even break them. THERE IS NO EXCUSE! There is no justification to be anything but open and forthright as a business owner when dealing with a vehicle owner or an insurance company. Sadly, in far too many instances, collision repairers are forced to operate in a gray area. They know what they are entitled to in the repair process but have heard far too often, “We don’t pay for that.” So rather than fight, they resort to methods to get what they need. Many times, they resort to these methods based on very poor advice they receive from any number of sources without checking into the legality of the practice.

Unfortunately, knowing that their methods and practices of getting paid deservedly have not always been open and transparent, it creates a situation that strengthens the insurer’s position of, “We don’t pay for that.” Not only that, but it also weakens a shop’s ability to vigorously pursue an issue they would and should possibly be successful in challenging.

At our recent General Membership Meeting held on June 17 featuring Kristen Felder of Collision Hub, some very eye-opening issues were revealed. Kristen is uniquely qualified to speak as a collision industry representative, as she has had a long professional career working in the insurance industry. Previously spanning a 14-year career with State Farm, her work in insurance took her from the corporate office as a consultant, to leading field operations for national catastrophe teams responding to disasters, such as Hurricane Katrina. She has a working knowledge of the information gathering and use of information to challenge a multitude of scenarios presented in the negotiating and billing process of collision repairers.

We are all well aware of the fact that, as an industry, we are retailers providing a service. As with any good retailer, when an analysis of one’s business expenses versus their desire for a reasonable and fair profit level does not align, the cost of services must be increased. Unfortunately, in the collision repair industry coupled with the third-party payee factor, there is also a huge “competition” factor unnaturally and improperly controlled by that same third-party payee. A third-party payee who firmly believes that the “golden rule” is, “he with the gold rules.” That same third-party payee is very adept at selling the concept that they are there protecting vehicle owners while keeping policy costs down, while they are only looking to mitigate their losses and maximize their profits at the expense of their policyholders while hoping collision repairers will not only not challenge them, but also subsidize the insurer in the process.

It is this very scenario and the difficulty getting paid fairly that has led to what ultimately becomes viewed as devious business practices. There are two cases that come immediately to mind, both of which deal with the billing of sublet work. One in particular is dealing with the markup for services a collision repairer has made the arrangements for, paid for, and then awaits reimbursement for, from an insurer. As with any well-run retail business, all expenses incurred while arranging for a provided service must be compensated for along with a reasonable markup. Taking advantage of less than welleducated collision shop owners transitioning from body men to businessmen, the insurance industry has taken the position that setting up a tow, arranging for a front-end alignment and – in today’s vehicles – scans and calibrations are “ALL A COST OF YOU DOING BUSINESS.” Since it was easier in some instances to arrange for a discount off the retail amount paid, collision repairs rarely showed a markup. It appeared that the shop was merely passing its costs through to the insurer. Shops that attempted to show what they paid and then collect a markup have been strongly challenged. Some insurers balk and take the “Ragu” position: “It’s in there.” Other repairers have taken to submitting what can only be termed a falsified invoice for payment.

In the case of scanning and calibrations, some shops have been sold a bill of goods by equipment manufacturers. They have been told that they should create LLCs for the purpose of billing for these services. This is all well and good if the LLC is NOT just a shell company. It must be a real tax paying company, with real employees, with all the bells and whistles that define a company.

As with anything that is done to deceive or hoodwink an insurer, ultimately, they become the wiser. As Kristen made everyone aware in our meeting, insurers are cracking down and shop owners are being led away in cuffs and being charged with insurance FRAUD. THERE IS NO EXCUSE FOR A FALSIFIED RECEIPT!

No amount of saying that the insurance company "is screwing me" or “won’t pay me from a legitimate invoice” will save you. You will be convicted. You MUST do the right thing. As the saying goes, “Two wrongs do not make a right.” As timeconsuming as it may be to fight to be paid fairly and reasonably continued on pg. 42