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November 2019 • Volume 17, No. 11

DEPARTMENTS

CONTENTS FEATURES

PRESIDENT’S MESSAGE By Kevin Gallerani 8 | Survey Says...

EXECUTIVE DIRECTOR’S MESSAGE

By Evangelos “Lucky” Papageorg

12 | The Brazen Absurdity of It All

LOCAL NEWS 18 | AASP/MA Promotes Labor Rate Bill at State House 19 | ADALB Continues Focus on Controversial Proposed Ruling 22 | AASP/MA Community Rallies to Fight ALS By Alana Bonillo 22 | Remembering Alan Roy

30 | COVER STORY By Joel Gausten

Labor Rates and Reality: Exploring True Numbers at AASP/MA’s Fall Meeting

NATIONAL NEWS 26 | Todd Tracy Returns to Industry Stage

ALSO THIS ISSUE 6 | AASP/MA MEMBERSHIP APPLICATION 12 | WHERE’S LUCKY? AASP/MA CHAPTER MEETING SCHEDULE 16 | AASP/MA VENDOR AFFINITY BENEFITS 17 | AASP/MA VENDOR AFFINITY PROGRAM SPONSORS

ADVERTISERS’ INDEX Accudraft Paint Booths ................................OBC Audi Group....................................................39 Axalta ............................................................4 Best Chevrolet/Best CDJR ..............................IFC BMW Group ..........................................................24 BMW/Mini of Warwick ..................................34 Boch Chevrolet ........................................25, 33 Boch Genesis ................................................33 Boch Hyundai ................................................25 Colonial Auto Group ........................................9 Empire Auto Parts ..........................................13 Ford Group....................................................38

35 | LEGAL PERSPECTIVE

By James Castleman

Isn’t Cost Containment Supposed to Be Dead?

Fred Beans Parts ............................................33 Genesis of Norwood ..................................25, 33 Honda Group ................................................42 Hyundai Group ..............................................11 Imperial Ford ................................................38 Ira Subaru ......................................................11 Ira Toyota of Danvers ......................................10 Kelly Automotive Group ................................IBC Kia Group ......................................................11 Linder’s, Inc. ................................................25 Long Automotive Group ..................................14 Mazda Group ................................................32 McGovern Chrysler Jeep Dodge Ram ................33 Mopar Group ................................................15

Nissan Group ................................................41 PPG................................................................3 Quirk Wholesale Parts ....................................29 Reliable Automotive Equipment ........................7 Sarat Ford Lincoln ..........................................28 Subaru Group ................................................20 Tasca Group ..................................................27 Toyota Group ................................................37 Volvo Group ..................................................23 VW Group ....................................................21 Wellesley Toyota/Scion ..................................28 Wheel Collision Center ....................................13

New England Automotive Report November 2019 5

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2019 - 2020 as provided for in this contract.

REV 5/19

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New England Automotive Report November 2019 7

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VICE PRESIDENT’S MESSAGE

Survey Says...

By KEVIN GALLERANI

Last month, I joined over 100 of my fellow AASP/MA

65 percent during the same time period? That 65 percent is

community members and other repair professionals for the

derived from parts; our Labor Rate has not increased in any

association’s Fall Meeting in Wrentham. As you’ll read in this

substantial way. It doesn’t make sense that insurers’ premium

month’s cover story, it was one of the most important events

increases are nearly double the figures we’ve experienced in

in the history of our industry in Massachusetts. For months,

the last 19 years.

AASP/MA has urged shops throughout the Commonwealth to

Finally, we have the data we need to properly document

take five minutes to complete the VRS Standardized Labor

and defend our position. Also, thanks to NABR’s BillableGenie

Rate Survey (nationalautobodyresearch.com) through Na-

system, we are able to offer real proof that we are not the only

tional AutoBody Research (NABR). At this special meeting,

ones performing and charging for certain needed procedures.

Sam and Richard Valenzuela of NABR revealed some of the re-

Now what? The bottom line is that none of this matters

sults gathered through the project. It is worth noting and cel-

unless we use the information presented to us. AASP/MA has

ebrating that Massachusetts has had the quickest response

been pushing for Labor Rate reform for years – including with

rate – and, as a result, the quickest statistically valid showing

our long-running bill at the State House – and NABR is the

- of the Labor Rate Survey of any state in the country.

latest (and strongest) ammunition we have in our arsenal.

Right off the bat, the NABR results determined that the

Don’t miss the opportunity; use the Labor Rate Survey and

mean average Labor Rate for body work in Massachusetts is

BillableGenie to your advantage. Also, join AASP/MA if you

$57 – clearly higher than what we’re being paid now. That fig-

not already a member – to strengthen our numbers, add to

ure isn’t just derived from repairers moaning and groaning; it

our voice and help us draw attention to the Labor Rate issue

is the result of serious industry input and the efforts of an in-

faster and with greater urgency.

dependent third party that studies numbers for a living.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

Take a good look at this month’s cover. Isn’t it interesting AASP/MA VICE PRESIDENT KEVIN GALLERANI is vice president of Cape Auto Collision Center in Plymouth, MA. He can be reached at (508) 747-0316 or kevin@capeautobody.com

that insurance premiums have gone up 121 percent since 2000, while the body shop’s costs of repair have gone up only

N

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AU M TIVE AUT T TI TIV STAFF

AASP/MA EXECUTIVE COMMITTEE

PUBLISHER

CREATIVE DIRECTOR

Thomas Greco - thomas@grecopublishing.com

Lea Velocci - lea@grecopublishing.com

SALES DIRECTOR

EDITORIAL/CREATIVE COORDINATOR

Alicia Figurelli - alicia@grecopublishing.com

Alana Bonillo - alana@grecopublishing.com

EDITORIAL DIRECTOR

PRODUCTION

Joel Gausten - joel@grecopublishing.com

Donna Greco - donna@grecopublishing.com

PUBLISHED BY: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963 www.grecopublishing.com

CELEBRATING 30 YEARS New England Automotive Report is published monthly by TGP, Inc., 244 Chestnut Street, Suite 202 Nutley, NJ 07110. Distributed free to qualified recipients; $48 to all others. Additional copies of New England Automotive Report are available at $5 per copy. Reproduction of any portions of this publication is specifically prohibited without written permission of the publisher. The opinions and ideas appearing in this magazine are not necessarily representations of TGP Inc. or of AASP/MA. Copyright © 2019 by Thomas Greco Publishing, Inc. Images courtesy of www.istockphoto.com

WWW.AASPMA.ORG 8 November 2019

New England Automotive Report

TREASURER Matthew Ciaschini LEGISLATIVE CHAIR Peter Langone IMMEDIATE PAST PRESIDENT Paul Hendricks

PRESIDENT Molly Brodeur VICE PRESIDENT Kevin Gallerani SECRETARY Gary Cloutier

AASP/MA STATEWIDE DIRECTORS COLLISION DIRECTOR Rob DelGallo

AT-LARGE DIRECTOR Adam Ioakim

AASP/MA DIRECTORS Ray Belsito Alex Falzone Rick Fleming

Joshua Fuller Kevin Kyes Frank Patterson

Mike Penacho Dana Snowdale Bill Spellane

AASP/MA ADMINISTRATIVE OFFICE Evangelos “Lucky” Papageorg: AASP/MA Executive Director

Alana Bonillo: AASP/MA Administrative Assistant P.O. Box 212 Marlborough, MA 01752 617-574-0741

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EXECUTIVE DIRECTOR’S MESSAGE

The Brazen Absurdity of It All EVANGELOS “LUCKY” PAPAGEORG

It appears that as a society, we are being subjected to more and more blanket-type statements for the purpose of swaying opinion. These statements are not founded in fact but merely tug at the “heartstrings” of an audience. Sadly, this method of garnering favor for one’s objective seems to be more and more prevalent and acceptable. People will say whatever it takes to win, no matter how far-fetched or outlandish. As long as it makes their point, the fallout is irrelevant.

I recently had the opportunity to give testimony on behalf of AASP/MA on two proposed pieces of legislation.

One is in regards to changes in the way a Labor Rate is determined for collision damage repair, and the other involves having the Auto Damage Appraiser Licensing Board (ADALB) moved from its current designation under the Division of Insurance (DOI) to the

which dealt with the removal of the safety inspection sticker by an appraiser when safety items are damaged and the vehicle is not staying at a collision repair center.

In these cases, testimony was heard from interested parties before the Joint Committee on Consumer Affairs and Professional Licensure regarding the ADALB move and before the Joint Committee on Financial Services regarding the Labor Rate setting and the sticker bill. Those interested in giving oral testimony are allotted three minutes. Yes, just three minutes, and there is a timer counting down in full view. Written testimony that goes into a more detailed explanation about one’s position on a bill may be submitted. As you can imagine, three minutes is precious little time to mount a significant argument for, or against, a particular bill.

To make matters more challenging,

may or may not be entirely true or accurate. I find this to be the most difficult aspect of the whole process.

With regard to the Labor Rate Bill, our allotted three minutes stretched to about 10 as the House Chairman and a second House member on the Joint Committee asked several delving questions regarding the health of our industry as it pertained to quality technicians in the field and individuals entering the collision repair field. They were also quite concerned to hear of the diminishing number of registered repair shops in the Commonwealth. The discussion was very positive in nature, as they clearly understood the artificially suppressed Labor Rate and its effects on collision repairers. As it turns out, both members of the House who posed those questions were raised in families who ran and still run repair facilities – both collision and mechanical. Each of them were acutely

Department of Public Licensure (DPL).

There were also a few other related bills up for comment, the most notable of

it is not an open forum in which you can make rebuttal statements or debate specific points that were made, which

aware of the issues that face us.

It was when an insurance spokesperson took a turn at the

Where’s Lucky?

Visiting Boston/Southeast

AASP/MA Chapter Meeting Schedule

Attending SEMA Show in Las Vegas Visiting Western

From October 28 through November 1, he will be visiting shops in the Boston/ Southeast region.

Visiting Boston/Northeast

During the first week of November, Lucky will be attending the SEMA Show in Las Vegas.

During the second week of November, Lucky will be visiting shops in the Western region.

He will be visiting shops in the Boston/Northeast region during the third week of November.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

12 November 2019

New England Automotive Report

Lucky can be reached at (617) 574-0741 or lucky@aaspma.org.

NEAR1119.qxp_NEAR1014 10/18/19 10:18 AM Page 13

microphone that I wished for the ability to verbally rebut comments. Her comments should raise the ire in each of you. Her first salvo was launched against the current sticker bill. Her position was that the language requiring a sticker be scraped and replaced with an equipment defect certificate should be abolished. Her reasoning was that no one had removed a sticker in many, many years. What she really found “appalling” was that the only reason that legislation had been enacted was to force insureds (who would otherwise have pocketed the insurance check) to get the vehicle repaired. She would later refer to US as a “pricegouging” industry. Of course, she completely ignored the fact that the sticker was to be removed for safetyrelated items. She used a well-worn argument that it puts an undue financial hardship on the vehicle owner to have to get the vehicle repaired. (After all, it was still drivable). She was evidently speaking for a company and industry that is more concerned with profitability than the safety of the motoring public, saying that it “might be something [minor] like a broken tail-light [or] windshield wipers not working” rather than being concerned about the insureds’ safety or the safety of those sharing the road with them.

This insurer representative went on about the poor people who may not be able to get to work if they could not afford the repairs. Her example was about damages that would have allowed the vehicle owner to pocket “$300” rather than get the vehicle repaired. We all know that if the insured keeps the money and elects not to get the vehicle repaired, they would be potentially defrauded by a lowballed estimate by hundreds – sometimes thousands – more. There is also the fact that the vehicle is unsafe to drive or be on the road. There is no denying the insurers’ hopes that the vehicle owner will just go away and pocket the money. We, as collision repairers, see this on a daily basis and have hundreds of examples of continued on page 40

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[LOCAL] NEWS Jack Lamborghini of Total Care Accident Repair (Raynham)

Actually, they have changed! They have gotten far worse! The rate of reimbursement by insurance companies for the everincreasingly difficult task of repairing today’s vehicles has not kept pace with rising costs of doing business. This compounds the problem that as an industry, we are unable to entice new, young talent to enter this field because they can make hundreds of thousands of dollars more in a lifetime in other similar and related fields.”

Papageorg detailed how the low Labor Rate has led to the industry’s inability to provide the financial incentives

AASP/MA Promotes Labor Rate Bill at State House

necessary to grow its workforce. In addition, the current rate of labor reimbursement has prevented many shops from pursuing OEM certification programs, which often require an investment of several thousand dollars. As a result, some automakers refuse to sell structural parts to these shops due to their non-certified status.

“Many of our vocational schools – the training ground for our future workforce – are starting to discontinue their collision repair programs because of lack of interest. This is causing our current workforce to age out at an alarming rate.

The average age of a qualified, experienced collision repair technician is approximately 53 and climbing. We are also losing

As discussed at length in this month’s cover story, AASP/MA is working diligently to bring relief and reform to current Labor Rate conditions in the Commonwealth.

gifted repair technicians to our neighboring states where insurance reimbursement rates are higher.”

Joint Committee Co-Chair James M. Murphy, himself a

Additionally, the association is still promoting passage of its

shop owner (Murphy Brothers, Inc.; Weymouth), expressed his

long-running Massachusetts Labor Rate Bill (currently House

empathy for Papapeorg’s position on the Labor Rate issue,

Bill 983 and Senate Bill 658). In late September, AASP/MA

particularly with respect to finding new technicians.

Executive Director Evangelos “Lucky” Papageorg offered the latest testimony in support of the legislation before the Joint Committee on Financial Services at the State House in Boston.

AASP/MA’s legislation aims to have the state’s collision

“In our industry, [the problem] is not the lack of work; it’s the lack of help,” he said.

Away from the Labor Rate issue, Papageorg noted AASP/MA’s opposition to House Bill 3555/Senate Bill 645

repair Labor Rate determined by an independent third party

(which would require licensed auto insurance damage

based on the average rate of the five neighboring New England

appraisers to provide safety notices to the owners of damaged

states. This calculated average would then be used by the

motor vehicles), House Bill 1059/Senate Bill 580 (which would

Massachusetts Commissioner of Insurance to set the rate.

Papageorg stressed the urgency of establishing a more

strike language in Chapter 175 of the General Laws in regard to automobile reinsurers), House Bill 899 (which seeks to abolish

realistic Labor Rate, which hasn’t increased in any significant

the Auto Damage Appraiser Licensing Board within the Division

way for the past three decades.

of Insurance) and Senate Bill 1033 (which would provide for

“The collision repair industry here in Massachusetts has the

temporary emergency licensing of appraisers of motor vehicle

third-highest cost of living and doing business in the country

damage covered by auto insurance policies). He voiced the

and the lowest insurance reimbursement rate. That’s right; we

association’s support of House Bill 960/Senate Bill 629 (which

are in 50th place.

would expand insurance coverage options to include

“We’ve given testimony regarding this issue for nearly 15 years at this point,” he added. “The issues that an artificially suppressed Labor Rate cause have not changed in all that time.

diminished value). The text and history of each of these bills is available at malegislature.gov/Events/Hearings/Detail/3282.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

18 November 2019

New England Automotive Report

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ADALB Continues Focus on Controversial Proposed Ruling

AASP/MA Executive Director Evangelos "Lucky" Papageorg appeared before the Joint Committee on Financial Services to testify in support of the association's long-running Massachusetts Labor Rate Bill.

At their September 24 meeting at the Division of Insurance in Boston, the Auto Damage Appraiser Licensing Board (ADALB) again discussed a proposed Advisory Ruling – introduced nearly a year ago – that aims to address issues caused when a vendor refuses to sell parts to a shop despite that vendor being identified on an insurer estimate. After a lengthy discussion (including considerable input from attendees and AASP/MA members Jack Lamborghini of Total Care Accident Repair in Raynham and Peter Langone of Langonet Auto Body & Frame in Agawam), the Board agreed to post the language of the proposed Advisory Ruling to the ADALB section of mass.gov for an open comment period and vote at the next meeting (scheduled for November 26 at the Division of Insurance).

In other news, ADALB member Bill Johnson suggested that the Board consider sharing the nature of the complaints being heard in executive session during the public portion of each meeting. An update to this inquiry is expected at the next meeting.

Complete video (with notes about the highlights) of the September 24 ADALB meeting is available in the Members Only section of aaspma.org.

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New England Automotive Report

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[LOCAL] NEWS By Alana Bonillo

AASP/MA Community Rallies to Fight ALS This past September, the AASP/MA community came together to show support in the fight against amyotrophic lateral sclerosis (ALS), otherwise known as Lou Gehrig’s disease.

AASP/MA Executive Director Lucky Papageorg has regularly participated in the Ride to Defeat ALS event. This year, he took things up a notch by inviting anyone in the AASP/MA family to take part by way of riding as part of Team AASP/MA or making a monetary donation. Multiple members of the association contributed to the team or made in-person donations to the cause at the association’s recent Fall Meeting.

In addition, AASP/MA supported the Ride to Defeat ALS, which celebrated its 25th anniversary, as a first-time corporate sponsor. The association intends to continue to sponsor this event to spotlight its involvement in the community and raise awareness of the

ALS disease. As this issue of New England Automotive Report went to press, Papageorg was still working towards reaching a goal of $4,000. This year’s event has already exceeded its goal, having raised more than $270,000 in total.

“I have been very fortunate each of the last three years through the generosity of many of my friends and colleagues to have met my fundraising goal,” comments Papageorg.

Although he does not have a direct connection to the disease, it hasn’t stopped him from partaking in this event annually. When he recently learned that a member of the Massachusetts collision repair family – Gary Eno, a 30-plus year employee of D.B. National – lost his battle with the disease, he decided to ride this year in his honor.

“I dedicated my ride to those who were unable to ride due to their ALS affliction and those who have lost their battle to this debilitating disease.”

D.B. National Sales Representative CJ Timmons worked closely with Eno, who his department referred to as “Chief.”

“Gary started with the company long before the current owner purchased it.

He worked with us for over 30 years.

When he was hit with ALS, it only took a year and a half for that massive disease to overtake him, unfortunately,” he shares.

Papageorg is already looking forward to next year’s Ride to expand AASP/MA’s involvement and hopes more members of the association will come on board to participate. The Ride now includes a motorcycle riding component, which he

AASP/MA was proud to be a part of this year’s effort to defeat ALS as a first-time corporate sponsor.

AASP/MA Executive Director Lucky Papageorg and Ashley Corbin, special events manager for the ALS Association hopes will continue to attract more collision repairers to take part.

To make a donation or to learn more about the ALS Association and its other events, visit als.org.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

Remembering Alan Roy New England Automotive Report is saddened to report that Alan Roy, owner of Roy’s Collision and Auto Body of East Bridgewater (formerly Whitman), passed away on September 8.

Roy was a valued member of AASP/MA and considered a true asset to the collision repair community. He was also an active member of the former Massachusetts Auto Body Association (MABA), serving on the Board for the association’s Plymouth chapter. He was often called upon to serve as an umpire and settle differences between insurers and body shop appraisers.

AASP/MA Executive Director Lucky Papageorg remembers Roy as “one of the collision industry’s unsung heroes.”

“Alan was indeed a very special person with a very unassuming personality who was always willing to help, and he never looked to be in the spotlight when he did. Not many know, or will ever know, how much they owe him for all the work he accomplished behind the scenes on behalf of the industry. He was always willing to share information and was truly a champion in documentation and fighting for what was right and just.”

Roy is survived by his wife, Robin; his son, Adam; his siblings Alice Thieme, Linda Weber, Dorothy Bailey, Kenneth F. Roy, Jr., Laurence Roy and Renee Wolfe; and many nieces and nephews.

AASP/MA and New England Automotive Report extend our deepest condolences to his friends and family.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

22 November 2019

New England Automotive Report

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[NATIONAL] NEWS

Todd Tracy Returns to Industry Stage Attorney Todd Tracy showcased new technologies - and new liability concerns for repairers - at a recent presentation in Texas

It might be hard to believe, but there’s a deployed airbag in that seat cushion. Would you be able to spot if it came to your shop?

The multimillion-dollar 2017 verdict against John Eagle

deployment being difficult for even the most seasoned

Collision Center in Dallas, TX was a history-making event that

technician to spot, these special components are rarely

showcased the need for collision repairers to always perform

acknowledged in the industry – even by some automotive

safe and proper procedures as specified by the OEMs. In

manufacturers.

addition to a hard-hitting May 2018 presentation for AASP/MA, attorney Todd Tracy spent 2018 sharing the details of the case with industry groups throughout the country. After a months-long absence from the spotlight, Tracy recently

“How would you know to look? They don’t put it in their owners’ manuals; they don’t put it in the repair manuals.”

In a 2018 blog on his website (vehiclesafetyfirm.com), Tracy wrote that it is “unclear if DTC [diagnostic trouble code]

returned to the state where it all began to update members of

scanners are programmed to detect the presence of this seat

the Auto Body Association of Texas (ABAT) and other area

cushion airbag and whether or not it is connected to

industry professionals of new technologies and the potential

sensors…In the meantime, I want to urge the collision repair

litigation surrounding their repair.

industry to physically check seat cushions for the presence of

Speaking at the 2019 Texas Auto Body Trade Show in Fort Worth, Tracy gave attendees a thorough – and often jaw-

an airbag.”

As covered in the November 2018 issue of New England

dropping – look at new and developing technologies that will

Automotive Report (available online at grecopublishing.com),

soon have an impact on shops’ potential liabilities. Not

Tracy caused waves at last year’s Texas Auto Body Trade

surprisingly, the industry’s growing emphasis on advanced

Show by revealing the results of a special vehicle crash test

driver-assistance systems (ADAS) was a major focus of his talk.

demonstrating that aftermarket crash parts do not perform as

“If you touch the car and you make a dollar, you’ve got to

well as OEM replacement parts in a subsequent collision.

get paid for recalibration. If you don’t, you’ve got to do [the

Tracy’s position on non-OEM products remains unchanged in

procedure] for free, because [attorneys] are going to line up for

2019.

you when something bad happens.”

Tracy spent considerable time educating the room on the growing presence of seat cushion airbags in certain vehicles, particularly Toyotas since model year 2012. In addition to their

“If you’re using certified [or non-certified] aftermarket parts instead of OEM parts, you’d better be prepared to get sued, because I’m telling you we know the story now.”

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

26 November 2019

New England Automotive Report

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New England Automotive Report November 2019 27

NEAR1119.qxp_NEAR1014 10/18/19 10:18 AM Page 28

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New England Automotive Report November 2019 29

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[COVER] STORY By Joel Gausten

“The only thing necessary for the triumph of evil is for good men to do nothing.” – Edmund Burke The above quote, mentioned by AASP/MA Executive Director Evangelos “Lucky” Papageorg during the association’s sold-out September 28 Fall Meeting at Supercharged Entertainment in Wrentham, sums up the Massachusetts collision repair industry’s current mindset in regard to the Labor Rate.

For the past several

months, AASP/MA has urged Commonwealth shops to participate in its VRS Standardized Labor Rate Survey (nationalautobody research.com) administered

by National AutoBody Research (NABR) and sponsored by FinishMaster.

The effort has already paid off, with Massachusetts boasting the quickest response rate of any state in the country. As of this writing, NABR had already reached 322 responses – more than enough to make

The Fall Meeting wasn’t all about Labor Rates.

Following the NABR discussion, AASP/MA members hit the track at Supercharged Entertainment.

30 November 2019

New England Automotive Report

the results statistically valid.

Finally, AASP/MA, the Commonwealth collision industry and the consumers they serve have legitimate figures compiled by an independent third party that make it abundantly clear that the current average Labor Rate of $38.28 (according to a 2018 Mitchell Industry Trends Report) is in need of serious reform.

This message was driven home by an in-depth presentation by NABR’s Richard and Sam Valenzuela, who traveled from Arizona to bring AASP/MA members up to date on the survey’s progress and the intriguing numbers it has already revealed. The father-andson team shared that, after reviewing the information received by Massachusetts collision repairers on their non-concessionary posted door rates, the realistic average posted Labor Rate for body and refinish labor in

AASP/MA President Molly Brodeur

AASP/MA Executive Director Lucky Papageorg

Economist Dr. Frederic Jennings (EconoLogistics)

NEAR1119.qxp_NEAR1014 10/18/19 10:18 AM Page 31

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

2019 ANNUAL FALL MEETING MASSACHUSETTS

Sam Valenzuela (NABR)

Richard Valenzuela of National AutoBody Research (NABR)

the state is actually closer to $57 – much higher than the current amount paid by insurers.

“When an insurance company tells you what the prevailing rate is in your area, they’re going to be wrong,” observed Richard. “Why? Because it’s not going to be $57. The state rate is $57 according to you, and we have the statistics to support it because you filled out the survey.”

Tellingly, even this much higher rate does little to combat the economic realities of life in Massachusetts, as the Valenzuelas revealed that the body Labor Rate would need to be $76 an hour just to follow the current Cost of Living Index in the state. In contrast, the graph featured on this month’s cover shows that increases in auto insurance premium prices significantly outpace both inflation and the growth of auto body repair costs.

Sam stressed that the Labor Rate Survey is in place to observe trends in nonreferral rates for insurance reimbursement, and NABR follows an important mantra: “Customer pay leads the way.” He explained that a true prevailing rate is what customers are willing to pay shops for their work – not a

figure based on the artificially suppressed average Labor Rate.

Other Massachusetts rates captured by the Survey include $83 for mechanical, $67 for frame, $65 for structural, $41 for paint/materials, $91 for aluminum body and $99 for aluminum structural.

The Labor Rate Survey is designed as a living document to encourage regular – even daily – updates from users on rates, certifications, training, equipment and more.

Participants receive quarterly emails asking if the information they submitted is still current and accurate.

In addition to the Labor Rate Survey, NABR offers BillableGenie, a program that features a searchable database of what repairers across the country report in regard to what procedures they are being paid for by insurers. As of this writing, the system boasts in excess of 4,000 repair and payment records nationwide. Sam explained that BillableGenie is a way for shops to push back when an insurer insists it doesn’t compensate facilities for certain things done during the repair process.

“That’s not true, and we have the data to prove it. This is the first time you’ve ever continued on page 40

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New England Automotive Report

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[LEGAL] PERSPECTIVE by James A. Castleman, Esq.

Isn’t Cost Containment Supposed to Be Dead?

For several decades prior to 2007, the Commissioner of Insurance set the premium rates that all Massachusetts insurers were required to charge for private passenger auto insurance. Every year, the Division of Insurance held lengthy hearings to determine what those premiums should be. Once the hearings were complete, the Commissioner “fixed and established” the premium rates. While those rates varied between defined geographic territories within the state, all insurers had to charge the same rate for all coverages within each territory.

The Rise and Fall of Cost Containment The statute that governed how the premiums were to be set included a provision that required the Commissioner to “determine whether insurance companies utilize adequate programs to control costs and expenses, in accordance with standards determined or approved by the commissioner. At a minimum, the programs shall be designed to have a material impact on premium charges by reducing costs and expenses incurred by insurance companies.”

As a result, the Division of Insurance issued regulations in the mid-1980s that prescribed what insurers needed to do to establish the mandated “cost containment” programs. Further, the organization representing the state’s insurers in the rate-setting hearings was required to make a separate filing each year that would establish that insurers had adequate programs in place that would contain the costs that they paid for various types of claims.

With regard to auto damage claim payments, the Commissioner’s regulations required insurers to establish each year that they had programs in place that contained costs for auto body repairs. To do this, the regulation required that the insurers’ programs would do the following: Assure that these companies were not paying body shop Labor Rates that were too high;

Attempt to obtain discounts on parts prices Attempt to pay for less expensive used or LKQ parts instead of new OEM parts Not overpay for towing and storage Keep repair times in line Not pay for a total loss when it would be less expensive to pay for repairs For 20 years, the insurers made the required cost containment filings. And for most of those 20 years, the Commissioner found that Massachusetts insurers were not doing enough to contain auto damage claims costs. The Commissioner, therefore, reduced the amount that the insurers were allowed for premium rates, telling the insurers that they had to do a better job the next year to contain claims costs. As a result of the pressure from the Division of Insurance, the insurers became more and more aggressive in trying to limit what they would pay for repairs.

Because of what the insurers were forced to do, there were major disputes over the course of many years between insurance appraisers and collision repair shops regarding what insurers would allow for repair costs. Shops needed to get paid enough to be able to make proper repairs and stay in business. Yet, insurance appraisers were under the gun from their employers to cut costs however they could by:

Paying only what we allow as a Labor Rate; paying only for reduced repair times; paying only for LKQ or aftermarket parts; and allowing for only a limited amount of storage time; etc.

When shop appraisers asked for what they needed, they were often told by insurance appraisers that they could not pay those amounts because of cost containment.

When the system for fixing and establishing auto insurance rates was abandoned in 2007 and competitive rate setting was introduced, insurers no longer had to make yearly cost containment filings with the Division of Insurance, and they no longer had to follow the cost containment regulations.

Members of the collision repair industry breathed a sigh of relief – temporarily thinking that they would now be able to negotiate successfully for Labor Rates, times, parts and procedures that they needed. But such was not to be the case.

New England Automotive Report November 2019 35

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[LEGAL] PERSPECTIVE

Why is Cost Containment Still an Issue?

It May Actually Be Worse Now

Although the Commissioner of Insurance no longer sets auto premium rates nor requires the insurance industry to make yearly cost containment filings, insurance appraisers still use cost containment as an excuse for not paying what collision repair shops need. Many people in the repair industry believe that the excuse is no longer valid, and that it hasn’t been for over 10 years. But is that true?

It turns out that insurers are still required to have cost containment programs, and that they still will be penalized if they do not. The requirement now comes from a different source, however, and the penalties now will be assessed against individual insurers that fail to have adequate programs rather than against the Massachusetts auto insurance industry as a whole. Further, the Commissioner of Insurance is no longer the one who makes a determination as to whether insurers are doing enough to contain costs.

Cost containment continues to be an issue because of Commonwealth Automobile Reinsurers (CAR). CAR is the organization established pursuant to the statute that requires Massachusetts insurers to develop a plan for insuring high-risk drivers by making sure that these drivers are equitably assigned among all of the auto insurers in the state. The “assigned risk pool” statute also requires the insurers’ plan to “adopt performance standards for claims handling and anti-fraud efforts, including but not limited to programs to control costs and expenses…for risks insured or reinsured by the plan.

[Emphasis added.] All insurers issuing policies insured or reinsured by the plan shall comply with said performance standards.”

The statute that mandates the establishment of an assigned risk plan by Massachusetts auto insurers also requires CAR to develop Performance Standards for the continuation of cost containment programs by those companies. The statute further requires CAR to conduct regular audits of all assigned risk insurers and to penalize those carriers that do not have adequate cost control programs that meet the Standards.

Notably, the statute also requires assigned risk insurers to treat all claims the same – whether or not they are claims involving assigned risk drivers. So, the CAR Performance Standards cover virtually all auto damage insurance claims in the state.

As required, CAR established Performance Standards. Not unsurprisingly, those Standards mirror the requirements of the Division of Insurance cost containment regulations – and, in some respects, exceed the regulation’s requirements. As an example, one CAR Performance Standard requires that “ARCs [Assigned Risk Insurance Companies] must have a plan designed to seek the most competitive Labor Rates and times and to determine whether Labor Rates, repair and replacement times are reasonable and consistent with industry-recognized sources.” [Emphasis added.] Another Standard requires that “ARCs must allow for, and insist on, the use of aftermarket, rebuilt and LKQ parts in lieu of new or cost of repair, whenever appropriate.” [Emphasis added.] A third Standard requires that “ARCs must have programs and procedures to demonstrate its efforts to obtain discounts and pay less than full retail price for parts.” [Emphasis added]

Since individual insurers are now subject to regular audits and penalties for not meeting CAR Performance Standards, there now actually may be more pressure on individual carriers to contain costs than there was when cost containment reporting applied to the industry as a whole during the Division of Insurance premium rate setting hearings. An individual insurer can no longer hide behind an industry-wide analysis; each insurer must account for its own cost containment programs and conduct in complying with its programs.

Notably, although the Commissioner of Insurance has general oversight, CAR is run by the insurers themselves rather than directly by the Commissioner. CAR sets its own Performance Standards, conducts its own company audits and assesses its own penalties against insurers that don’t meet CAR’s requirements. In essence, Massachusetts insurers combine to set their own industry standards for what should be paid for auto damage claims.

As noted in a recent “Legal Perspective” article in this magazine, it is possible that this could be viewed as a violation of federal antitrust laws. As noted in that article, the statutory exemption that protects insurers from the antitrust laws applies only to the extent that “the business of insurance” is regulated by state action. The statute that establishes CAR and oversight by the Commissioner of Insurance may constitute “state action.” But case law makes it clear that “the business of insurance” applies only to government actions regulating the spreading and underwriting of risk between insurers and to the relationship between insurers and their policyholders. So, although the setting of premiums by a state allows insurers to be protected against antitrust claims for agreeing to charge the same rate, the law does not allow insurers to agree to anything with regard to how much they are going to pay for claims.

36 November 2019

New England Automotive Report

Conclusion It is true that the Commissioner of Insurance no longer directly requires insurers to have cost containment programs in place and no longer penalizes the insurance industry for failing to engage in intense cost containment. But CAR and its governing statute still require insurers to have cost control programs, and it appears that those programs may have to meet stricter standards than they previously did. To me, that appears to be the proverbial fox guarding the henhouse. Further, the system raises questions as to whether it is in the best interests of Massachusetts consumers who may want to feel assured that their insurers will pay adequate amounts for insured auto repairs. It also raises a question as to whether the system is actually legal.

Cost containment is dead; long live cost containment.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

Attorney James Castleman is a managing member of Paster, Rice & Castleman, LLC in Quincy, MA. He can be reached at (617) 472-3424 or at jcastleman@prclawoffice.com.

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WHY GENUINE PARTS? It’s the Right Thing to Do

You lose money when aftermarket parts don’t fit. Toyota Dealers are your best source for Genuine Toyota Parts. All it takes is one call.

For Toyota Genuine Parts please call one of these authorized local Toyota Dealers: RA Toyota of Manchester 33 Auto Center Road Manchester, NH 03103 Toll Free: 800-828-6076 Direct: 603-657-2410 Fax: 603-657-2419

IRA Toyota Danvers 161 Andover Street Danvers, MA 01923 PH: 800-774-8411 ext.1 Direct: 978-739-8306 FAX: 978-739-8098

stirrell@iramotorgroup.com www.iramotorgroup.com

www.iramotorgroup.com

Bernardi Toyota 1626 Worcester Road Framingham, MA 01702 Parts Direct: 800-248-3033 FAX: 508-879-7895 www.bernarditoyota.com

Wellesley Toyota 216 Worcester Street Wellesley, MA 02481 PH: 800-734-0006 Direct: 781-237-4042 FAX: 781-237-3481 parts@wellesleytoyota.com www.wellesleytoyota.com

ToyotaPartsAndService.com New England Automotive Report November 2019 37

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Get it right from the source.

Ford and Lincoln Mercury dealers are the one-stop source for all of your collision repair needs.

When you need fascias, grilles, headlamps, wheels or any other Ford Motor Company Genuine Part, call your local wholesaling dealership. They’re a great souce for technical and repair information as well. Using Genuine Parts can help your body shop reduce cycle time, improve relationships with insurance companies and satisfy customers. So get everything you need in just one call to your one-stop collision repair resource – your local Ford or Lincoln Mercury Dealership.

Contact these Ford or Lincoln Mercury dealers for all your parts needs: Imperial Ford 6 Uxbridge Road Mendon, MA 01756 Toll Free Parts: 877-272-0332 Toll Free Fax: 877-800-6316 Call us for your wholesale parts needs

Sarat Ford Lincoln Mercury 245 Springfield Street Agawam, MA 01001 413-786-0430 Fax: 413-789-3715 www.saratford.com

Quirk Auto Dealers 115 E. Howard St. Quincy, MA 02169 Toll Free: 877-707-8475

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New England Automotive Report

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Audi dealers strive to make you an Audi Genuine Parts fan •

Audi Parts professionals are your subject matter experts on collision parts, replacement components and mechanical items.

•

Many Audi dealers offer technical service support hotline access that can reduce your repair times and help you meet an on-time promised delivery.

•

Installing Audi Genuine Parts contributes toward improved cycle time that helps make both your customer and their insurance company happier.

•

Regardless of the age of your customer’s Audi, Audi dealers have access to over 200,000 part numbers.

No other supplier comes close.

Helping you do business is our business. Order Audi Genuine Parts from these select dealers.

Audi Natick 549 Worcester Street Natick, MA 01760 www.bernardiaudi.com 800.247.3033 Fax: 508.651.6841

Audi Peabody 252 Andover Street Peabody, MA 01960 800.774.8411 Parts Direct: 978.605.2182 email: pwalke@iramotorgroup.com www.audipeabody.com

Mattie Audi 80 William S. Canning Blvd.

Fall River, MA 02721 800.678.0914 Fax: 508.730.1283 www.mattieaudi.com

Hoffman Audi 700 Connecticut Blvd East Hartford, CT 06108 860.282.0191 Fax: 860.290.6355 www.hoffmanauto.com

New England Automotive Report November 2019 39

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EXECUTIVE DIRECTOR’S MESSAGE continued from page 13 severely underwritten vehicles in our possession. You need to compile these examples and be ready when called upon to share the information with your legislators. They need to make informed decisions and not ones based on sensationalized and inflammatory comments by the insurance industry.

If the scenario, as portrayed by this insurance spokesperson, does not make you see red and want to set the record straight, I do not know what will. There is a constant, unrelenting attack being lodged against the collision repair industry. You need to take action. For those of you who are members of AASP/MA, you will be receiving the month’s Damage Report newsletter, in which you will find even more disturbing and infuriating comments launched against the hardworking men and women in our industry given as testimony on the Labor Rate bill. If you are not a member, I can only repeat a question I have asked all too often: “WHY NOT?” AASP/MA has been at the forefront pushing for legislation to protect consumers and our industry. We are present at these legislative hearings. We represent consumers and our industry at the ADALB and fight the abuse of the regulations. We bring you national news and issues, such as the recent petition we sent out to stop the Department of Justice from abolishing the 1963 Consent Decree (an effort that led to hundreds of signed petitions from the collision repair community). We are always looking to promote our own positive legislation to protect consumers and our industry, but it is equally important that we defend against potentially adverse legislation by insurance companies. To be successful, it takes you – the non-member – to join us in that fight.

As absurdly brazen as it was for the comments to be made publicly by the insurance spokesperson, it is equally

40 November 2019

New England Automotive Report

absurd that you do not add your voice to push back and set the record straight.

JOIN US NOW!!!! See the AASP/MA member application on page 6.

As a member of AASP/MA, you must strengthen our voice by enlisting your fellow colleagues to join you and AASP/MA as we address this and many other issues that face us. As a member, you believe in and contribute to AASP/MA and its endeavors. Share that

belief, and we will ALL benefit. When you receive the next issue of Damage Report, print it out and share it with fellow colleagues. And when you do, bring a copy of this magazine too, and direct them to the member application on page 6. Ultimately, they will be grateful that you did.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

AASP/MA EXECUTIVE DIRECTOR EVANGELOS “LUCKY” PAPAGEORG can be reached at (617) 574-0741 or lucky@aaspma.org

[COVER] STORY continued from page 31 had anything like this. With a few clicks of a mouse, you can find out what insurers are paying for what stuff – and how much – all around the country, with shops like you who have shared that data with us. No one’s standing in the way now; you can share that stuff with us directly.”

With BillableGenie, Massachusetts shops can have greater confidence in arguing that an insurer’s Labor Rate does not adequately reflect the marketplace. By using the records accessible in the system, users can provide consumers with clear examples of their insurer (or others) paying for certain operations and procedures at other facilities – thus putting more power in the shops’ hands to document and justify their operations and related charges.

AASP/MA President Molly Brodeur stressed the importance of members using BillableGenie on a regular basis.

“That is really the tool that has the power. The only way that the tool can help us is by all of us collectively sending documentation in to the Valenzuelas so that they can load it in there. Without us doing that, BillableGenie isn’t going to have any real, good data for us to use that’s specifically about Massachusetts.”

During the Q&A/comment session that concluded the gathering, Ipswichbased economist and frequent New England Automotive Report contributor Dr. Frederic Jennings (EconoLogistics) shared some thoughts on how collision

repairers could look to the mechanical side of the field – which receives higher pay despite not having the capital expenses, skill requirements and risk/liability as auto body repair – for insight into market rates.

“The mechanical repair market is an uncontrolled market…The mechanical repair Labor Rate should be a benchmark that’s below what an uncontrolled market collision repair Labor Rate would be.”

Ultimately, the relevance and effectiveness of the VRS Standardized Labor Rate Survey and BillableGenie will depend on how many repairers in the Commonwealth put the information to good use.

“If 300 people took a survey and walked away, what do you think is going to happen to your Labor Rate?

Nothing,” offered Sam. “It’s not about the number that we’ve collected; it’s about what people do with the data we have.

“We’re arguing about what temperature it is,” he added. “There’s no argument there; the temperature is what it is. The rates are what they are, and the VRS shows that to you.”

To participate in the Labor Rate Survey, please visit nationalautobody research.com and click on the Massachusetts state emblem. More information on AASP/MA is available at aaspma.org.

PROTECTING CONSUMERS AND THE COLLISION INDUSTRY

MASSACHUSETTS

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GENUINE NISSAN PARTS

MAKE ALL THE DIFFERENCE.

Only Genuine Nissan Parts deliver the fit, reliability, and performance to meet your shop’s collision repair needs. So keep it original, and keep it real with Genuine Nissan Parts.

Contact these Nissan dealers for all your parts needs: Mastria Nissan 1305 New State Highway Raynham, MA 02767 Direct Toll Free: 800-248-2458 Direct Fax: 508-802-6118 E-mail: parts@mastrianissan.com Web: www.mastria.com

Kelly Nissan of Lynnfield 275 Broadway (Route 1) Lynnfield, MA 01940 Toll Free: 800-698-9280 Fax: 781-598-8026 E-mail: BSherman@Kellyauto.com

Kelly Nissan of Woburn 95 Cedar Street Woburn, MA 01801 Phone: 781-835-3510 Fax: 781-835-3580 E-mail: mbosma@kellyauto.com

Quirk Auto Dealers 115 E. Howard St. Quincy, MA 02169 Toll Free: 877-707-8475

www.kellyauto.com

New England Automotive Report November 2019 41

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It Takes Genuine Honda Collision Repair Parts To Achieve a Genuine Honda Fit. Honda collision repair parts are engineered and manufactured to Honda standards.

In the collision-repair business, time is money, and you can’t waste time on parts that almost fit properly. Use Genuine Honda replacement parts. Your reputation depends on it.

For Genuine Honda parts, contact these Authorized Honda dealers.

Bernardi Honda 960 Worcester Road Natick, MA 01760 Parts Direct: 800-247-3033 FAX: 508-651-1220 www.bernardihonda.com

Lia Honda of Northampton 293 King Street Northampton, MA 01060 Toll Free: 800-369-7889 Direct: 1-413-586-6043 FAX: 1-413-585-0502 www.liahondanorthampton.com

Honda North 382 Newbury Street Danvers, MA 01923 Toll Free: 800-882-9797 FAX: 978-774-9483 e-mail: eadams@iclautos.com www.hondanorth.com

Kelly Honda 540 Lynnway Rt. 1A Lynn, MA 01905 Parts Direct: 800-779-7466 FAX: 781-595-2898 e-mail: mpsomosjr@kellyauto.com

Honda of Enfield 20 Palomba Drive Enfield, CT 06082 Toll Free: 800-222-6632 FAX: 860-253-5419 www.liahondaofenfield.com

Schaller Honda 1 Veterans Drive New Britain, CT 06051 Toll Free: 800-382-4525 Direct: 860-826-2080 FAX: 860-826-2083 e-mail: jkiniry@schallerauto.com www.schallerauto.com

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New England Automotive Report

Lundgren Honda of Auburn 525 Washington Street Auburn, MA 01501 Toll Free: 800-777-2044 FAX: 508-721-0872 e-mail:pmccarthy@lhonda.com www.lhonda.com

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WHOLESALE PARTS Dedicated to Your Wholesale Parts Needs!

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KELLY Jeep Chrysler Lynn eld 800.278.8558 Fax 781.581.2490

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KELLY INFINITI Danvers 866.883.7093 Fax 978.750.6962

KELLY Volkswagen Danvers 888.426.5268 Fax 978.774.8007

KELLY Ford Beverly 978.922.0059 Fax 978.922.8508

Commercial Vehicles

kellyauto.com

KELLY Ford Beverly 978.922.0059 Fax 978.922.8508

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