State of Florida CFO Jimmy Patronis said in April that windshield-related lawsuits went from 591 in 2011 to 37,000 last year as a result of the state allowing assignment of benefits (AOB) — when an insurance policyholder signs over their claims to repairers who can then sue insurers. AOB also entitles the third party to make repair decisions and directly bill a carrier for the policyholder.
Unable to rule on GEICO’s appeal of a Florida district court order that sided with Glassco Auto Glass in its claim payment lawsuit against the carrier, the U.S. 11th Circuit Court of Appeals has sent the case up to the state’s Supreme Court.
Glassco filed suit against GEICO in August 2019 over alleged “deeply discounted” payments the carrier made based on the “prevailing competitive price” in the National Auto Glass Specifications (NAGS) for auto glass repair. Glassco argued that nearly all of the 1,773 claims it filed with GEICO between 2016 and 2019 were underpaid. The plaintiffs sought to collect the difference between its invoiced charges and what GEICO paid, which Glassco found to be $700,000.
Eleven of the 1,773 cases were consolidated and tried in Florida state small claims court, resulting in a final judgment for Glassco’s invoiced prices against GEICO. GEICO settled an additional 53 cases. Glassco’s other 1,709 cases remain pending in state court.
GEICO countersued Glassco in federal court for more than $700,000 paid on claims from 2016 forward, alleging Glassco isn’t entitled to payment because it violated Florida’s Repair Act in five ways:
- By subcontracting repair work without its insured customers’ knowledge or consent;
- Failure to provide customers written notice of the option to obtain a written estimate;
- Failure to provide written repair estimates;
- Failure to provide invoices when repairs were completed; and
- Failure to include vehicle odometer readings on work orders and invoices.
“Even assuming Glassco violated the Repair Act, the district court concluded that Glassco’s violations (1) were at most technical violations of the Repair Act and (2) did not render Glassco’s claims non-compensable vis-à-vis GEICO,” the 11th Circuit judges wrote. “Therefore, Glassco’s reimbursement claims submitted to GEICO were not fraudulent or unlawful.”
GEICO alleged the following in the suit:
- Glassco has no right to receive any payment because of its Repair Act violations;
- Federal Racketeer Influenced and Corrupt Organizations (RICO) claim;
- Federal RICO conspiracy claim against the Glassco owners;
- Violation of Florida’s Deceptive and Unfair Trade Practices Act;
- Florida RICO claim;
- Common law fraud;
- Unjust enrichment; and
- Florida Motor Vehicle Repair Act statutory claim.
The district court sided with Glassco on counts one, two, three, and five. The court also sided with Glassco on counts four, six, and seven but only to the extent that they were based on Repair Act violations. Count eight was dismissed.
However, the court said GEICO can, under the Repair Act, file a complaint with the Florida Department of Agricultural & Consumer Services (FDACS) about the defendant’s alleged non-compliance. FDACS would have the power to impose a civil penalty, including a fine, an injunction against specified activity, and a revocation of Glassco’s registration.
GEICO appealed the district court’s decision in the 11th Circuit accusing Glassco of failing to inform GEICO policyholders that by signing a work contract for the repairs, Glassco would have the right to sue their insurance company under their name for non-payment.
A recent Washington Post article says that auto glass shops often solicit windshield repairs at Florida car washes and in parking lots, sometimes even going door-to-door. They look for damaged windshields and then tell the owners that they can replace them at no cost because it would be covered by their auto insurance comprehensive insurance.
“But after the signature is collected and the repair is made, the glass shops send exorbitant bills to insurers, who often deny or pay out a lesser amount for the claim,” the article states. “Lawyers then sue the insurance company for payment and the cost of legal fees, often settling hundreds of lawsuits at a time for a hefty sum.”
More than 46,000 auto glass lawsuits have been filed in Florida so far in 2023, according to data retrieved by The Post from the state’s Department of Financial Services.
Fix the Cracks — an initiative by the National Insurance Crime Bureau (NICB), Consumer Protection Coalition, American Property Casualty Insurance Association (APCIA), and others that backed passage of the new glass law — argues on its website that, “AOB auto glass abuse rewards few at the expense of many.”
Auto glass lawsuits went up 4,000% from 2011-2021, including a recent spike of roughly 30% between 2021 and 2022, according to Fix the Cracks.
In June, Florida Gov. Ron DeSantis signed a glass repair bill into law that eliminates AOB on insurance claims.
Chapter 2023-136 prohibits shops or their employees from “offering anything of value to a customer in exchange for making an insurance claim for motor vehicle glass replacement or repair,” otherwise known as AOB. It also prohibits insurance carriers and auto glass shops from steering customers to certain businesses.
The new law also expands the state’s definition of unlawful vehicle repair shop acts to include offering inducements for making vehicle glass replacements or repair insurance claims.
However, Capital City Consulting partner Ashley Kalifeh told The Post the AOB law only applies to insurance policies renewed or reissued after May 26, 2023.
“Until the recent changes passed by state lawmakers, Florida had what are called ‘one-way attorney’s fees’ — a requirement that the insurer has to cover the plaintiff’s reasonable legal fees if it loses or settles a claim,” The Post article states, which Kalifeh reportedly said is “where the real gravy is.”
Florida attorney Zachary Hicks, who has worked on auto glass litigation cases since 2019, told The Post “there’s not a lot of clean hands in this industry.”
“The problem is that plaintiff’s lawyers will abuse the system if you let them. Insurance companies will abuse the system if you let them,” he said. “Insurance companies got exactly what they wanted — they eliminated it all — and rates are still up.”
In the GEICO v. Glassco case, the 11th Circuit judges sent two questions to Florida’s Supreme Court:
- Does Fla. Stat. § 559.921(1) grant an insurance company a cause of action when a repair shop does not provide any written repair estimate?
- Do the violations here under the Repair Act void a repair invoice for completed windshield repairs and preclude a repair shop from being paid any of its invoiced amounts by an insurance company?
Fla. Stat. § 559.921(1) is a trade, commerce, investments, and solicitations regulation that allows customers to sue for damages and injunctive relief.
GEICO contends that “because defendants never provided anyone with the requisite written estimate, no one was able to sign an estimate, and therefore no one could ever bring a private action against defendants.”
The carrier also argues that the district court’s “narrow” definition of “customer” protects repairers from liability for their own Repair Act violations.
“The questions presented are sufficiently unsettled, important, and likely to recur that we believe the best course is to certify them to the Supreme Court of Florida, the final arbiter of Florida law,” a panel of 11th Circuit judges wrote in their opinion on the case. “Plaintiff GEICO sued defendants, alleging eight causes of action, all premised on defendants’ purported violations of the Repair Act.
“Glassco gave a written work order to the insureds, which they signed. Glassco’s work order stated the repairs are at ‘no cost’ to the insured and Glassco assigned all rights to payment,” the opinion states, adding that under Florida law, insurers can’t charge a windshield repair deductible.
The judges further agreed with the lower court that “district courts within the circuit have routinely confronted similar Repair Act claims without binding precedent to apply,” and “clarification — sooner rather than later — about the scope of Florida law appears advantageous to all.”
“Moreover, the issues in this appeal will impact thousands of windshield repair claims,” the judges wrote.
Featured image: Stock image of windshield replacement. (Credit: herraez/iStock)