Insurance Companies may be playing demolition derby
with Florida consumers' lives and wallets.
Inside George Forman's collision inspection shop in Oakland Park, Accident Check, the evidence of botched repairs is all around him. Cars have had their doors, bumpers and side panels removed to expose or repair the damage.
The carnage he sees is all part of what he and other critics say is a wave of faulty repairs at insurance companies' handpicked body shops in South Florida, spurring a host of lawsuits and a booming business for Forman's own body shop and a few other local firms, including Wreck Check in Hollywood.
People are suffering from the illusion that there insurance company is going to do the right thing, and do a proper collision repair. "But their investment is destroyed and their lives maybe put in jeopardy when they get their cars back."
Meanwhile, local and state consumer and insurance agencies apparently have done little about the problem, generally siding with the insurance companies. One example: Some government officials, along with insurers and their favored body shops, assert that the wreck checkers are just interested in adding new forms of revenue by overcharging for repairs, nitpicking other shops' work and scaring consumers. "What makes them experts on auto repairs?" asks one staffer with the Broward County Consumer Affairs Division. "Some people are gullible." (The two leading local firms, both run by collision repair managers with more than 20 years each in the field, charge between $250 and $300 to inspect the car and prepare a detailed report, usually accompanied by photographs of the damage.)
Still, according to a former state Department of Insurance adviser interviewed by City Link, the state insurance agency the supposed watchdog of the industry has downplayed the issue of repair complaints against insurance companies. It also often presents inaccurate, pro-insurer advice to citizens, he charges. "Insurance company influence goes throughout the department," says Peter Bartlett, a veteran of the insurance and repair industries who was a consultant to the Department of Insurance in 1998 on improving its consumer services. "The consumer is so abused, and nobody's doing anything to help them."
In response, Tom Trefinko, the department's consumer assistance bureau chief, says, "To make a statement that we don't care about consumers is an outright, dadgummed lie. You will not find a more dedicated group of people in state government."
Whatever the truth about consumer protection, there's little doubt that lax oversight contributes to poor repair and the hundreds of wrecks that litter Forman's shop each year. Today, he points to a black Mercedes 500 SL that was once worth $58,000, but after accidentally getting submerged up to the windshield on a flooded street, it's nearly worthless. "It's a total loss, but the insurance company got it fixed' for three grand," he says with a world-weary cynicism. The car was returned as purportedly repaired, but almost as soon as the owner and his girlfriend started driving it, her car seat became unhinged and rolled around, the engine stalled, the windows automatically locked and the car began filling up with smoke. Today, it's rotting from within, and the insurance company is being sued in a "bad faith" lawsuit. As Forman scans his overcrowded garage, he starts pointing to different cars, a Porsche, a Dodge, a Lexus, intoning with each gesture, "This is a lawsuit ... lawsuit ... lawsuit. They're all going to major trials." Forman and others in the "postcollision" field often serve as expert witnesses and provide the documentary evidence for individual and class-action lawsuits against insurance companies.
The Miami attorney pursuing the Mercedes case won't be quoted on the pending litigation, but he sees repair problems stemming from the insurance companies' desire to reduce payouts. "The insurance companies are betting that most people won't fight for benefits. The adjusters want to see the least amount of work and deny coverage to as many people as possible."
Critics also say the insurance companies pick body shops that will willingly cut corners in repairs because of all the business the insurers steer their way. "With the sweet deals between the insurance companies and repair shops, they don't realize that their real customer is the consumer," says James McHugh, owner of the local Wreck Check branch in Hollywood.
Indeed, according to Bartlett, one insurance company representative even ordered a shop owner to comply with slipshod work by proclaiming: "We've got more money than God. We don't care what the law is, you're going to fix it our way."
Insurance company representatives say consumers, not cost-shaving, come first. They claim to select preferred "pro" shops often auto dealerships so they can guarantee customer satisfaction, with the goal of providing quality repair. "Our aim is to get the customer's car fixed at a reasonable price with good quality, and to put the car back into the condition it was before he had the accident," says Tom Hagerty, a spokesman with State Farm's Florida regional office. (This rosy view of insurer-linked pro shops is echoed by the Department of Insurance's press spokeswoman, Tammi Torres: "Using one of the preferred shops gives the consumer additional backup, because the insurers stand behind the shops.")
At the same time, the companies are vigorously, and often successfully, resisting in court the view that they should pay their customers for a car's "diminished value" in the marketplace after an accident, on top of paying for repair costs. Firms such as Wreck Check are pushing this issue, which has led to sharply varying court opinions across the country, and it's now before the state Supreme Court after an appeals court rejected in May the view that insurers should pay such costs. On the other hand, Forman and others say, it's the insurance industry's "best-kept secret" that companies will sometimes, if pressed, pay diminished-value claims usually worth thousands to an accident victim, or claimant, if one of their insured customers is at fault. (They'll pay third-party claimants because it's demanded by longstanding tort law precedents, but there's far weaker legal support for requiring such payments to their own insured.)
Whatever the legal disputes, Forman and McHugh have had some striking results helping consumers win diminished value and other claims against insurance companies. At times, the insurers or body shops have even bought back cars after a series of allegedly shoddy repairs at insurance-approved shops.
That's what ultimately happened to Seth Cohen, whose teenage son wrecked the family's 1999 Mazda last October while driving on the Sawgrass Expressway. The next day, Cohen called his insurer, State Farm, who recommended the car be towed to the nearest company-approved "pro" shop near him, Sawgrass Ford in Sunrise. After several weeks of repair work, Cohen recalls, the car was returned with about $11,000 worth of insurance-paid repairs. He only noticed a little bit of extra paint, or overspray, but when he went for routine service elsewhere, the mechanic pointed out a damaged frame on one side of the car. "Something was wrong with the car," Cohen says. Eventually, he brought the car to McHugh. His in-depth probing of the car found about 30 flaws caused by poor repair work, some necessary work the insurance company wouldn't pay for and, McHugh charged, $100 worth of fraud: two parts that were billed for but not installed.
"The frame was twisted like a pretzel on one side," says Cohen, and with poor welding, "rain was leaking into the car." He adds, "[Wreck Check] said they would not recommend any driving in it. I got angry. I was putting my son in a car that's now unsafe." Additional work still didn't solve all the problems, and armed with a Wreck Check analysis, he secured a payment for the car's pre-accident value of $14,000 from Sawgrass Ford and turned the car over to them. "You have to be a smart consumer and check the work when somebody's life is involved," he concludes.
In this and similar cases, insurance companies and body shops say their responses actually illustrate their dedication to customer service. Sawgrass Ford's Rick Reichanadter, the director of fixed operations, says, "The repair job wasn't up to our standards, we want to make it right and we did the next best thing by buying back the car." His collision shop fired the worker who made the original mistakes and has tightened up its inspection procedures before releasing a car. It is still an approved State Farm shop, and he says, "We do 300 vehicles a month and this is the only problem of this kind we've had."
Maybe so, but consumers usually don't see any redress until an outside repair expert such as McHugh, or an attorney, get involved. For instance, Janet Koehler, a policyholder with Merchants and Business Man's Mutual Insurance Company, got into an accident in December 1999. But when she complained to the insurer about the company-approved repairs of her $19,000 Mustang, nothing happened, so she went ahead and purchased another used Mustang. She also turned to Forman's Accident Check shop for an assessment of the repair damage, but, says her attorney, Jerry Willis of Boca Raton, "The company wasn't taking her [and her husband] seriously. It basically told them to go f*** yourself, and it filed a complaint against George Forman for practicing law without a license."
All that changed when Willis got involved in April 2001, writing a detailed letter threatening a lawsuit against the insurer for the negligent work done by its two selected repair shops. Among the flaws documented by Forman were faulty repairs of the fenders and transmission, along with weak welding throughout the frame, all making the car vulnerable to another crash. Shortly after receiving Willis' letter saying the evidence would make a "compelling case to any jury," the insurance company wrote a check for $34,000 to pay for the value of the damaged Mustang, the used one she bought and punitive damages. Don Carrol, the adjuster for the company's general agent in Florida, Nu-Main of Florida, declined to answer phoned and faxed queries by City Link.
The damage from poor repairs might not be noticed until it's too late, thus endangering lives. For instance, one client of Forman's, who declined to be interviewed, was hit by an Allstate driver last November and her car sustained major damage. But the repairs at Allstate-approved Fine Line of Boca led to a host of problems, including weakened fenders, a twisted roof that let in rain, a cardboard "shim" used on the left bumper to fake alignment and makeshift wiring repair that could, Forman says, "cause the car to burn up." Her car's value fell from $10,000 before the accident to less than $3,000 after all the repairs and she still owed money on it to a leasing company. After spending more than $7,000 in repairs, Allstate after months of foot-dragging was pressured by Forman's damning findings to fork over another $11,000 to Mitsubishi Leasing to pay off the rest of her lease. Fine Line of Boca is still an approved Allstate pro shop, and the owner of the company declined to comment on the case.
As for Allstate, the company says this shows again their devotion to consumers. "We totally satisfied this customer," says Kathy Thomas, a spokeswoman for Allstate's Florida regional office. "We feel badly, but situations are going to happen and we guarantee the work through these pro shops." She adds, "It doesn't take Accident Check for us to make good on our pro shop service."
Even so, customers of firms like Accident Check credit them for educating them about proper repair and getting some results when their own efforts don't win a satisfactory response. Jeanette Silver and her husband, George, struggled to get $8,000 worth of damage to their Mazda repaired correctly after she was hit by a State Farm driver last November. Initially, Forman reported, the car had several repair flaws, including weakened fenders that needed replacing to keep the car safe. After using the report to complain to State Farm, George Silver recalls, "The body shop manager definitely felt threatened. He jumped through hoops and fixed the car to our satisfaction." Silver also received nearly $3,000 from the insurance company to cover what's known as "perceptual" diminished value after an accident. Pete Martino, the manager of the body shop and service for Fairbanks Dodge Mazda in Coconut Creek, won't comment on the incident, but says, "Sometimes, a misrepair goes undetected."
Larry Aitkens of Weston, who used Forman's report to get re-repairs on his BMW after an accident in March, says, "If the car has some value, you need a consultant to work with you on repair." The main repair problem, according to Forman: welding so flimsy that "the [rear] quarter panel could fly off and kill someone." But Robert Bruser, the manager of the Lexus of Pembroke Pines body shop, disputes Forman's findings (even though it's been dropped from Allstate's shop program): "It's all not true. We're probably the most advanced body shop in the country," he says, citing its sophisticated welding machinery.
Unfortunately, Aitkens feels he still may have to take Allstate to court to win thousands of dollars in diminished value payments he believes he's owed.
Yet the Department of Insurance's Torres initially insisted, "We've had no complaints" from any citizens in Florida concerned about insurance company handling of shoddy auto repairs. But, says former department consultant Bartlett, an internal report prepared in 1998 showed that the top source of complaints to the department's consumer services division was motor vehicle issues, many of which involve auto repair concerns.
When presented with this document, consumer assistance chief Trefinko corrected the spokeswoman and asserted there was a misunderstanding. In fact, he says, a department analysis of consumer complaints between February and July 31, 2001 showed about 1,100 complaints related to the physical damage of cars, usually focusing on claim delays or denials. Because that's only about a third of all automotive complaints, he says, "If there was a large-scale, industry-wide problem, wouldn't there be more complaints?"
But to Bartlett, all the stats don't obscure a central problem: "People are sick of calling there, because they know nothing happens. It's such an epidemic that nobody knows how even to address it."
Accident Check's response to the Highway Robbery
Accident Check's greatest concern is the fact that the majority of cars repaired after a moderate-to-severe collision are devalued and unsafe. Failure to restore the safety and value in the repair process places consumers in peril in both the handling of the vehicle and impaired structural integrity of the vehicle. The U.S. Government has set crash response standards for all automobile manufacturers. These required standards are not being restored in the majority of collision repairs. Across America consumers are finding insurance coverage and expected professional repairs have not been up to reasonable expectations. In fact, some vehicle have been so poorly repaired, insurers are forced to buy back the poorly repaired car. Insurers, seeking to control costs continue to mandate repair procedures and parts that do not meet manufacturers and Federal Safety Requirements. If you have had repairs made and your insurer has maintained control of the repair process by directing repair procedures and parts, and things just do not seem right, you may very well be a victim. Our office has a continual flow of phone calls and e mails from distraught consumers who desperately need assistance because of sub standard repairs. You may have an unsafe vehicle, greatly diminished in value, a breech of contract by your insurer and or a bad faith cause of action.
All vehicles in this story have been purchased back by the insurance companies at N.A.D.A. retail book value to avoid trial. The book value is based upon the date of loss. Attorneys handling the cases in this story were forced to file breech of contract/bad faith lawsuits to affect a settlement of claim for the insured.