Labor rate bill fails in Mass., but supporters hope for passage in new sessionBy on
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Although a bill that would have forced insurers to raise Massachusetts’ lowest-in-the-nation auto body labor rate failed to make it into law this year, supporters are expecting the issue to be brought up again in the 2023 legislative session.
The labor rate bill was one of more than 100 outside sections that had been attached to the $3.76 billion economic development bill, all of which were stripped from the final legislation by a House-Senate conference committee.
“This was not an indictment against the language in section 110 or our original bill,,” Evangelos “Lucky” Papageorg, executive director of the Alliance of Automotive Service Providers of Massachusetts (AASP-MA), told Repairer Driven News. According to legislators, “the conference committee felt that in order to move the ball in a timely fashion, they could not address all of the outside sections,” he said.
Papageorg said he has been assured by legislators that the need to address the labor rate “is still primary in their concern. There is definitely a willingness to address the suppressed labor rate.”
Several bills had been introduced in the Legislature this year to address the issue. One of those bills, House 1111, had been attached to the Senate’s version of the economic development bill.
Under H.1111, minimum adjustment rates paid by carriers to their insureds would be raised to account for nearly 30 years of inflation with the new rates phased in over two years. It would then be adjusted each year based on the consumer price index (CPI) for the Northeast Region.
H.1111 would have set a minimum hourly labor rate of $55, the first significant increase in more than three decades. The labor reimbursement rate paid by the state’s auto insurers has only risen from $30 to the current average of $40 over that 30-plus-year period.
The bill would also have created an “auto body labor rate advisory board” within the state’s Division of Insurance, which would have make annual recommendations to the insurance commissioner. The commissioner would have been required to set a “minimum hourly rate that insurers shall pay” within 30 days of the advisory board’s report.
H.1111 and several similar bills had been endorsed by the Special Commission on Auto Body Labor Rates in its final report to the Legislature. The commission was formed in late 2021 to address the state’s stagnant labor rate, and examine its effect on consumers, and on the collision repair and insurance industries.
The commission found that auto body labor rates “must be addressed,” and that maintaining the status quo is “not a viable option.”
Papageorg said that because the labor rate reimbursement bill “had garnered so much traction and so much attention,” supporters are hopeful that it will not have to go through the entire legislative process again. “It could be attached to some other piece of legislation that is going to be addressed early in 2023,” he said.
Although supporters are disappointed that the bill failed to pass this year, the discussion of the issue “invigorated the thought process,” Papageorg said, with repairers recognizing that the labor rate issue needs to be addressed on a shop-by-shop basis.
Rather than “waiting for the Legislature to do something,” he said, “the right way to do it is to take the bull by the horns and do it ourselves. We have to stop protecting the consumer financially at our expense. We need to be able to charge what we are worth, have them have the discussion with the insurance company that they chose to protect them.
“‘Why am I having to cough up an extra X number of dollars per hour? Why am I going to have to pay for this particular procedure when the accident wasn’t my fault?’ Those types of things have to be something that the insured is going to take up with their insurer. We as collision repairers need to charge what we need to charge to do the work properly, be properly trained and accept the liability for what it is that we do. And right now the rate that we’re being paid does not meet any of those criteria.”
Papageorg noted that the $55 labor reimbursement rate proposed in Section 110 has already been made obsolete by inflation. Between January 2021, when the bill was originally drafted, and December 2022, the calculated figure would have been just shy of $68 per hour; now it would be approximately $75 if adjusted for the rise in the CPI, he said.
When faced with inflationary pressures, “Any other retail business can just raise their rates and people pay it,” he said. “It’s the insurers that are artificially suppressing the rate by saying we only pay X, and not taking into account the increase in CPI. They take into account the increase in CPI for themselves — their rates continually go up. All you have to do is look at your auto insurance bill from last year to this year, or the year before.
“Their attitude is, ‘well here’s your bill, pay it.’ That’s the attitude we need to take as collision repairers. ‘Here’s the bill; pay it.’ More and more collision repairs are tired of subsidizing the insurance industry, tired of the restraints that are put on them if they’re part of any kind of a referral or program contract. They’re saying, ‘enough is enough, I’m done. I’m breaking free. I need to not just survive, I need to thrive. I’ve got people that I’m responsible to, not just the vehicle owners but my family, the people who work for me, and their families.'”
Papageorg said the discussions around the labor rate legislation and the work done by the labor rate commission have created an opportunity for shops to press “the reset button.”
“I know as a good businessman, that collision repairers who are not performing proper procedures, who are not being paid properly, who do not have the proper equipment, are going to be in for a world of hurt very soon because the liability factor will put them out of business,” he said. “All we need is another John Eagle case because the vehicle wasn’t properly pre-scanned, post-scanned and calibrated, and you’ll see somebody go out of business.
“Your insurance doesn’t cover negligence. If you’ve done something from a negligent standpoint, because the insurance company isn’t going to pay you and you don’t have the chutzpah to charge the customer, you’re the one that’s going to be on the hook,” he said. “Your liability policy insurance carrier is not going to stand by you, or even hand you an umbrella. They are all looking for any way to deny your claim, and if you are not following the proper repair procedures, documenting them and getting paid to do the work. you are not only loading the gun, you are pointing it at yourself, and pulling the trigger for them!”
Featured image: The front entrance gate of the Massachusetts State House in Boston. (jorgeantonio/iStock)