A U.S. Minnesota District Court continues to weigh a motion for summary judgement in a free-speech dispute between auto glass company Safelite and the state.

The case touches on one of the questions at the heart of what constitutes misleading “steering” and what’s just a statement of fact about non-network aftermarket repairers.

Judge Susan Richard Nelson on Aug. 5 heard oral arguments on Safelite’s request that she decide the case against Minnesota’s attorney general and commerce commissioner (who oversees insurance) in its favor immediately without a trial.

Both sides are expected to be “ready for trial” by Monday, but that date doesn’t mean the trial will begin next week, and it’s not a deadline for Nelson to rule on the motion for summary judgement.

The case stems from a 2015 consent order between AAA and the Minnesota Department of Commerce in which the insurer was directed to quit using Safelite — allegedly an unlicensed adjuster — to administer glass claims.

AAA actually proposed the idea of dropping Safelite to avoid a larger penalty than the $150,000 in the consent order, according to the state. Minnesota also has observed that the AAA-Safelite contract included a provision that Safelite could be terminated at any time.

The consent order, approved in January by the insurer and state, still allows AAA policyholders to use Safelite for repairs, and AAA can still keep Safelite in their glass direct repair program. Safelite just can’t administer claims.

The issue surrounds not only instances of Safelite telling policyholders they will be balance-billed should they use non-DRP providers, but also its statements that policyholders might be billed in the face of statements and industry practice to the contrary, according to the state, which provided examples of each:

Safelite Solutions does not limit itself to telling policyholders that they “may” be balance billed. Plaintiffs corporate designee, Brian O’Mara, testified that Safelite Solutions uses telephone scripts in Minnesota telling policyholders that they “will” be balance billed if they use a non-preferred vendor:

Q: … are you aware of any scripts that Safelite uses for its insurance clients, that script language, that the policyholder will be balance billed if they do not select a preferred vendor?

A. Yes.

Q: Which insurance companies?

A. You asked me if I was aware of one, not which. I’m aware of one, and that would be one of the [AAA] groups.

Q. And is that true — is that a script that’s read in Minnesota? …

A. I believe so, yes.

The AAA scripts confirm this. …

Call recordings between Plaintiffs and policyholders also reflect aggressive attempts to mislead policyholders into believing that they will pay out of pocket if their chosen shop charges more than what the insurer pays. For example, Minnesota insured K.B. called her insurer, AAA, with a representative of Rapid Glass on the call, and the following exchange took place after Rapid Glass stated that it did not accept AAA’s pricing but would also not balance bill K.B. for the difference:

[Safelite]: Okay. And so, [K.B.], since the shop has disagreed to our pricing, I must inform you that AAA is willing to pay no more than $337 . . . Therefore, if you still wish to use this shop, just confirm with them what the price will be and make sure it does not exceed the $337.30. . . .

[Rapid Glass]: It — we don’t agree to those rates. If —

[Safelite]: I know.

[Rapid Glass]: — there’s any differences, she will not be getting a bill from Rapid Glass.

[Safelite]: I have to inform her of this since you’re disagreeing to our rates,
ma’am. So, [K.B.], just make sure it doesn’t exceed that cost, because if it
does exceed that, you would be required to pay the difference out-of-pocket.

Okay, [K.B.]?

[Rapid Glass]: Who would — wait, wait, wait. Who would make her pay? Because Rapid Glass would not make her pay out of pocket. . . .

[Safelite]: Okay. Well, I just am required to read that off to [K.B., and so, [K.B.], does that make sense?

The clear implication of Safelite Solutions’ representations to K.B. is that if she selected Rapid Glass she would be required to pay money out of her own pocket to cover the difference between what Rapid Glass charged and what AAA paid. Equally clear is that the purpose of the warning was to convince K.B. to drop Rapid Glass as her chosen provider and instead select a network-affiliated shop. Plaintiffs’ corporate designee further testified that the Safelite Solutions’ representative was on-script with these statements to K.B.

The state also says it asked glass and insurance industry representatives if balance-billing was common, and found that it effectively doesn’t happen in the state. Either shops eat the cost or seek an assignment of benefits and demand payment through the courts, the state says.

Auto and glass shops who feel like a deeper dive into what the state says it found regarding Safelite’s claims scripts should check out the exhibits submitted by Minnesota: Exhibits 1-7, Exhibit 8-9, Exhibit 10-12, Exhibits 13-18.

Safelite argued that even if the state’s right about everything — and it questions how much research Minnesota really did — it’s all irrelevant. Shops still have the right to balance-bill a customer, and even if they say they won’t, Safelite’s not obligated to believe them, it says.

“Defendant does not deny (and its witnesses admitted) that non-Network shops have the right to seek unreimbursed amounts directly from the policyholder,” its attorneys wrote. “In contrast, balance-billing is not possible with Network shops because they contractually agree to pay the insurance companies’ prices. Accordingly, when Safelite informs policyholders that they ‘may be’ responsible for charges from non-Network shops, it communicates the undisputed truth that non-Network shops may charge policyholders for unpaid balances while Network shops cannot. These facts alone render Safelite’s speech truthful and entitle Safelite to summary judgment.”

The state’s order actually targeted AAA, and it still allows the insurer to tell “insureds they may not receive a proper warranty from and/or may be balance-billed by non-preferred glass vendors” if “Respondents have specific information proving the assertion(s) to be true for a certain vendor.”

Safelite argued that it can’t be expected to keep track of the balance-billing practices of all 1,300 non-network shops.

Minnesota also added that Safelite misleads customers by these kinds of statements “when, as frequently happens, they are used in conjunction with quoted insurer prices that are arbitrarily low and unlawful.”

It gives one example of an AAA script that “suggests that the policyholder’s right to payment is capped by the insurer’s determination of the reasonable price, which it is not. It is capped at the amount determined to be fair and reasonable, subject to arbitration. This misrepresentation is compounded by the fact that multiple arbitrators found that the prices Safelite Solutions quotes were set arbitrarily in a manner illegal under applicable statute.”

Safelite also objected to the consent order’s barring AAA from stating the benefits of network shops prior to reading the mandatory caveat “Minnesota law gives you the right to go to any glass vendor you choose, and prohibits me from pressuring you to choose a particular vendor.” That requirement’s timing was arbitrary, it said, and compelling the speech was unconstitutional, according to Safelite.

Statements or insinuations about what would happen at a non-network shop (the implication — whether perceived or intended — they don’t warranty their work, for example) are frequently a source of contention between shops and insurers.

For example, citing complaints by shops, Democratic California Insurance Commissioner Dave Jones has proposed barring statements about non-preferred shops without evidence the shop behaves in such a fashion.

Other states also include reminders of a policyholder’s right to go wherever they want (in states with shop choice laws), and so what the court rules here could have a bearing on other jurisdictions.

Safelite had first attempted to appeal the decision to the Minnesota Court of Appeals but lost. Chief Judge Edward Cleary, who wrote the decision, found that as the discussion between AAA and Commerce wasn’t a judicial or even “quasi-judicial” proceeding, it wasn’t something that should come before the Court of Appeals. The Minnesota Supreme Court declined to hear the case in late April.

Featured image: The U.S. District Courthouse in Saint Paul, Minn. (Provided by U.S. District Court system)