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Attorney accuses NJ insurance department of favoring carriers in claims disputes

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Insurance | Legal
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A New Jersey shop owner and his attorney, on behalf of shop customers, are questioning whether the state’s Department of Banking and Insurance (DOBI) is doing its job to protect consumers and hold insurance carriers accountable.

Their criticism of the department stems from some insurance carriers refusing to properly indemnify Jerry McNee’s Ultimate Collision Repair customers and fighting against paying for repairs that follow OEM repair procedures.

Attorney Michael Jurista has filed records requests and continues to file complaints to DOBI on behalf of customers.

In part, Jurista’s Jan. 12, 2023 New Jersey Open Public Records Act (OPRA) request to DOBI asked for “all documents, complaints or communications dated January 1, 2020 through the present, wherein the Department observed or otherwise determined that an insurer’s claims settlement practices as related to auto physical damages claims are/were not meeting the standards established by statute or NJAC 11:2-17.1 et seq. …a copy of any documents or communications wherein the Commissioner made a finding of a violation of NJAC 11:2-17.1 et
seq. [and/or NJAC 11:3-10.1 et seq] as related to an insurer handling of a motor vehicle collision and comprehensive coverage claim.”

DOBI responded that it couldn’t find any and referred Jurista to a department website webpage listing all Division of Insurance enforcement activity by year. Jurista wasn’t able to find a single violation in the past three years, he said.

“I’m filing 20 of these [DOBI complaints] a month and I’m one of how many customers or insureds? And you couldn’t find any violations? Very odd,” Jurista told RDN.

Each time Jurista filed a complaint with DOBI on behalf of his clients — shop customers — he said he got the same response: The department had talked to the insurer and determined there were no violations.

“My response was, ‘I’m sorry. I’m confused. Did you want to speak to my clients? Did you want to speak to the customer? Did you want to see the evidence? I have the emails. I have voice recordings.'”

The response from DOBI was that they spoke to the carrier and found that their actions were OK, he said.

“How is that possible? They wouldn’t even look at the stuff I had so I requested the information from DOBI,” Jurista said.

He added that it has also become evident through his work with his auto repair customer clients, and talking to other attorneys, that two insurers, in particular, aren’t being held accountable by DOBI — State Farm and Progressive.

“It’s crazy when I get similar emails from these clients saying almost the same exact things about their experiences with the same insurance company,” Jurista said. “How is that possible, unless it’s [from] directives?

“At the same time all this is going on DOBI is approving rate hikes… They just approved something a little while ago requiring the minimum policy limits to be nothing under $25,000 which obviously costs consumers more money to have car insurance. And yet they’re paying less [on claims]. I don’t get it. …The regular, everyday person walking around the street has no idea what is going on until they’re actually having an issue with their vehicle.”

One recent example, Jurista said, is a class action lawsuit out of Florida filed against State Farm. The carrier has allegedly “made it part of their business model to deny necessary collision benefits by refusing to pay appropriate hourly labor rates for high-value luxury vehicles,” the lawsuit states. The plaintiff contends that the shop’s rates “represent the prevailing competitive prices.”

The case began in August 2022 with a breach of contract lawsuit. However, the plaintiff’s lawyers said they found during discovery that State Farm has been “utilizing a consistent, yet non-compliant company practice for the determination of collision benefits on high-value vehicles which fails to honor the requirements of the State Farm auto policy.”

Most pushback in McNee’s experience at his shop has been on following OEM repair procedures in which he’s repeatedly told by carriers that those repairs aren’t necessary and they won’t pay for them. Then, aftermarket, used or reconditioned parts are pushed on customers, and policyholders are told putting them on their vehicles won’t void their warranties, McNee said.

“It’s a bald-faced lie but yet they have no problems spewing that information to the customer,” he said. “It’s overwhelming to hear what some of the customers are saying.”

And it’s not just his customers that have similar complaints, or as McNee called it, “nightmares.” It’s all across the state and country, McNee said. While AASP-NJ members have shared what their customers are saying with McNee, the association hasn’t had direct conversations with DOBI about those concerns.

“Part of the problem that we have is that some consumers will not get involved at all,” McNee said. “This plays right into the insurance agenda and DOBI is unwilling to listen to the shop unless they’re a designated representative.”=

“They [DOBI] want no involvement with the shop. They take the complaint and they’ll either rubber stamp it right on the spot ‘case closed’ or they’ll do the research. And when I say research, they’re going to reach out to the insurance company. If the insurance company told them the sky is purple,’ case dismissed — the sky is purple.’ Never mind looking out the window.”

On behalf of one of McNee’s customers, Jurista asked DOBI to re-open an investigation of a State Farm claim that the department concluded the carrier had not violated any regulations. Jurista argues that State Farm acted in bad faith by providing an initial photo-based estimate that was five times less than supplements added to the claim came to be.

“While the Department may or may not consider the discrepancies in State Farm’s own estimates to be dispositive on the issue of bad faith, the Department should and must nevertheless take note that the insurers are relying upon these increases from their initial estimates as a tactic to convince the Department that they acted in good faith in negotiating with the auto repair shops,” Jurista wrote.

“[W]hat specifically did the Department rely upon when it summarily concluded that State Farm attempted to negotiate in good faith while Ultimate did not? …In truth, it is without question that Ultimate made numerous attempts to negotiate their repair estimate with State Farm by offering to reconcile and lower their estimate. Conversely, not only did State Farm make no attempt whatsoever to negotiate this claim in good faith, but their appraiser blatantly admitted to Ultimate that he was instructed by State Farm’s upper management as to what he is allowed to pay and that he has no authority to negotiate the claim any further.”

DOBI Consumer Protection Services Supervisor of Investigations Thomas Stanley replied to Jurista that he agrees with the prior determination that State Farm wasn’t in violation of damage inspection or repair regulations.

Stanley noted in response to Jurista that, according to New Jersey Administrative Code 11:3-10.3(a), insurance companies aren’t required to inspect damaged vehicles in person or prohibited from doing photo inspections. 

“A cursory review indicates that some items from your clients estimate appear to be missing from State Farm, but the same review also indicates that some items that State Farm shows they are paying for appear to be missing from your clients estimate,” Stanley wrote in an email to Jurista.

“I say ‘appears’ in these statements as it is clear, on some items, that your client and State Farm may use different verbiage to describe the same thing. What I was able to determine is that State Farm did participate in negotiations with your client regardless of any continued disagreements. The September 7, 2022 State Farm estimate you provided clearly reflects an increased hourly rate for body and paint labor, feather prime, and block from $71.00 per hour to $125.00 per hour.”

Stanley added that his office would not “complete a line-item review of the evidence, isolate the discrepancies, calculate the differences, then present the argument to State Farm.”

RDN asked Stanley for comment but didn’t receive a response by the publication deadline.

RDN also asked State Farm for comment on the complaint to which a spokesperson responded, “State Farm has nothing to share with Repairer Driven News.”

Other cases Jurista is working on have to do with Progressive, which is allegedly steering customers to their DRP shops, he said. He’s currently “flooding” DOBI with similar statewide complaints weekly on behalf of Progressive policyholders. When Jurista brought the alleged steering up to DOBI about a month ago, he was told it would be looked into after complaints were received. He hasn’t heard back.

“In the ones I’m filing now, I’m being way more aggressive specifically towards DOBI,” Jurista said. “I’m calling them out in the complaint saying, ‘You know, based upon my experience, I doubt you’re going to do anything, but I hope you prove me wrong.’ We’ll see. That’s the process because there’s no private right to enforce these regulations so it has to go through them.”

AASP/NJ continues to monitor the situation and welcomes shop owners to share their stories via the AASP/NJ Hotline at (732) 922-8909.


Featured image credit: Wasan Tita/iStock

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