A Connecticut attorney offered auto repair shops a prospect last fall for filing short-pay lawsuits in a small claims court.
The discussion by John Parese, Partner of Buckley Wynne & Parese, in “Litigation and Short Pay Claim Winning” applies to businesses that use assignment agreements to obtain money an insurer owes its customer for repairs. (Parese’s course and more than a dozen other virtual SCRS Repairer Driven Education courses can be repeated until August 31, 2020.)
(Note: Parese’s comments and this article are for informational purposes only and are not intended as legal advice. Consult a qualified lawyer licensed in your jurisdiction prior to taking action. Parese also works in Connecticut, so some of these may not be for you Your person apply state.)
Customers are those who actually owe body shops; In turn, primary or third-party insurers owe and reimburse customers. According to Parese, a shopkeeper has “no independent right” against an insurer.
However, if an insurer refuses to reimburse part of the repair bill, a store and customer can make a benefit assignment. In this way, according to Parese, the shop can “follow in the footsteps of your customer in order to represent the claim”.
This could include legal proceedings. Parese discussed other litigation locations, but most of his advice in the Repairer Driven Education session was on filing these AOB short pay claims in small claims court with the help of a legal counsel.
Parese said he was making a straightforward complaint. Most courts don’t want to get caught up in concepts like the history of labor rate suppression or the consent decree of 1963, he said.
Simplicity is better, according to Parese. “You are a bill collector,” he said. “They’re filing a lawsuit to get paid for a job well done.”
If the repair shop lacks proper repair forms and permits, “you’re dead in the water,” Parese said. He said he won’t even take a short pay case if the shop doesn’t have a proper signed contract and invoice with the customer.
“You must have your papers correct,” he said.
Parese said a store and a customer should have a contract, a “legally binding agreement”. The repairer should check with state laws and regulations about what should be included in this document.
Parese said he also prefers for stores to seek customer consent to collect storage fees. “Everything is transparent.”
“You can’t go wrong with transparency,” said Parese. Demonstrating this transparency in court will always be the right step, he said.
A final invoice should indicate the deal’s fee, amount paid, and amount owed. “It really should be that simple,” said Parese.
He described previous experiences in stores where multiple documents like a third insert were reconciled to get a grand total. “Forget that,” he said.
Parese also advised businesses not to run off the insurer’s estimate. “Get away from it,” he said.
Parese said the stores should also ensure that they have completed all work and billed correctly.
Lawsuits mean “extreme control,” Parese said. If you’ve done “something shady”, such as You cannot go to court for work that has not been done or cash on the side, he said.
As noted above, the customer is the one who owes money, either under their own primary insurance policy or the culpable party who met them (which in turn is owed by their own insurer or their own). Parese said a business must have the cession of benefits that entitle it to the money due to the applicant.
“You have to get on your shoes,” said Parese.
Parese said he uses the same benefit assignment for first and third party claims. It is a contract that offers to exchange the consideration for the return of the customer’s vehicle for the right to benefits for the customer.
Parese said he will also take a copy of the Assignment of Benefits Act to court in case there is ever a dispute that “you cannot legally assign that claim”. However, he said he has filed between 50 and 100 lawsuits on behalf of the businesses: “I never had my assignment challenged in court.”
Parese said another attorney might “bark” on a job on occasion, but 95 percent of the time, he’s never questioned, and he’s never lost on that point.
“It’s a well-known legal right,” he said.
Know the customer
Parese said repair shops should make sure their customers are cooperative. Most of the time, customers will feel safe in a business that is confident and ready to go to court, he said – the perception is that a repair shop doing something awkward wouldn’t try to go to court.
However, some customers might be more difficult to deal with and not worth litigating in situations like this, Parese said.
“You have to choose your battles,” he said.
He also said a customer could not file a short repair repair lawsuit if they already had a personal injury claim for damages. Instead, he said a business would send their information to that attorney and want to pursue the matter in this action.
A business needs to be sure that liability is set out in a third party AOB claim. “You can’t win without a mistake,” said Parese.
He said he had heard stories from other lawyers who believed they were opening a case over a bill payment discrepancy – only to fail to find evidence of who was to blame. According to Paresis, this is an underlying predicate that is required in the event.
This can usually be determined with a police report or, according to paresis, allowed in the response to a complaint. He said he will make the claim that liability is undisputed in his letter of formal notice and if the other party does not contest this, their silence can request consent.
Labor rate survey
Parese encouraged workshops to conduct a labor rate survey and described a process of calling 8 to 10 competitors and asking for their reported labor rates. It could be used in court, he said.
However, he stressed that the information should be kept private and not passed on to competitors in order not to violate antitrust law.
He said he often finds that his customers are “somewhere in the middle” and cited this “helpful piece of information” for a judge or jury who “inevitably” is told by the insurer that the prices of a deal are the highest anywhere .
“It’s coming,” he said.
Parese also said he likes to have examples of a business paying his labor rate, which belies the idea that the rates are absurd. He said he had customers come up with dozens of examples of receiving this wage. “That’s great evidence,” he said.
Stamp controls ‘UNDER PROTEST’
Finally, Parese encouraged businesses to be aware that cashing insurance checks does not constitute approval of the insurer’s estimate.
He said that all of his customers have a stamp that says “ONLY ACCEPTED IN PROTEST AS PART PAYMENT ONLY FOR REAL ESTATE DAMAGE.” They stamp checks at the time of confirmation with this message “every time. The whole time.”
Such a stamp should definitely be placed in situations where the store is expecting a “beef” with the carrier, Parese said.
Without that explanation of cashed checks, Parese said, an insurer could argue in court that it made an offer, the shop accepted it, and received something in return. “‘That’s a contract.'” The deal’s appearance in court could turn out to be a denial of the deal.
The dispute over the price was documented by the stamp on the check and by sending a letter of formal notice. “You avoided this trap,” said Parese.
“Litigation and winning short pay claims”
Society of Collision Repair Specialists, published November 2020
Virtual Repairer Driven Education courses (repeatable until August 31, 2021)
John Parese, Partner at Buckley Wynne & Parese, will present “Litigation and Winning Short Pay Claims” in the fall of 2020 as part of the Society of Collision Repair Specialists’ virtual Repairer Driven Education series. A sample for the assignment of services is on the left. (Screenshot from SCRS video)
John Parese, Partner at Buckley Wynne & Parese, will present approval of the insurer’s estimate as part of the Society of Collision Repair Specialists’ virtual Repairer Driven Education series “Litigation and Winning Short Pay Claims” in the fall of 2020. (Screenshot from SCRS video)