pleased with the Superior
Court decision.
Pawtucket’s Crown Collision Center scored a courtroom victory last month when Rhode Island Superior Court Judge Frank Williams reversed a decision by the state Department of Business Regulation.
The DBR had previously ruled against Crown Collision after several competitors filed charges against the company suggesting that by reporting certain damages to an insurer, Crown Collision was in effect making appraisals without a license, prior to performing body work.
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The initial DBR ruling was a blow to direct repair relationships — the Superior Court reversal, a victory.The case — which dates back as far as 1996 — brings to light what has become the controversial issue of direct repair relationships — and the use of after-market auto parts.
To proponents of direct repair relationships, such arrangements simplify life for the consumer. An individual gets involved in an accident and brings his or her car to a body shop that has a pre-existing relationship with an insurer. The bodywork is approved – and valuable time, and money is saved.
“Direct repair is entirely for the benefit of the consumer,” said Douglas J. Emanuel, a lawyer with Tillinghast Licht Perkins Smith & Cohen in Providence, who represents Crown Collision.But opponents – many of them smaller body shops — stand by a series of complex state statutes that outline guidelines for appraising auto body damages. The guidelines are there, they say, to protect them from being overrun by the giants of the industry.
The bulk of the state’s smaller body shops do not have direct repair relationships and their complaint is that the larger shops with direct repair relationships are able to monopolize body work — in effect, by steering work to certain body shops.
Insurers, say the opponents, embrace relationships because they inevitably reduce their costs. In response to Judge Williams’ reversal, the DBR has requested that the Rhode Island Supreme Court take up the case.
Neena Savage, legal counsel for the department, confirmed last week that the state would like to get a ruling on the case from the state’s highest court.
“We need clarity from the courts to verify our interpretation,” she said. “The case is very fact specific. We need to know whether the statute applies to this set of facts.”
The case represents the old “big guy versus little guy” dispute. The big insurers want to deal with the bigger body shops that have the resources to do a large volume of work — and provide the kinds of customer service “extras” that produce repeat business. The smaller body shops do not have the luxury of volume.
Direct repair facilities such as Crown Collision are not uncommon.
“Crown Collision has been the flag-bearer for direct repair facilities and the (Superior Court) decision should reaffirm to the industry and the public that direct repair is not only legal, but beneficial to consumers,” said Emanuel. Emanuel said he “hopes this is about a bigger issue”
“There are many auto body shops with direct repair relationships and DBR only prosecuted Crown,” he said.
Stephen D. Zubiago, of Nixon Peabody in Providence, serves as local counsel for the National Association of Independent Insurers (NAII). The NAII, said Zubiago, is pleased with Judge Williams’ reversal.
“It affirms that we can repair cars on a direct repair basis,” he said. “This helps control costs.”
