Volume 12, Issue 2 - March/April 2009

T h e L a w

It Really Does Take Two to Tango
by Chuck Lloyd

In the seemingly never-ending battle over auto glass reimbursements, recently there has been a new strategy employed by insurers (primarily insurers whose glass claims are administered by Safelite). This strategy is to try to cram their rates down the throats of non-network glass shops. In the pricing update letters that most (if not all) of you receive from Safelite on behalf of their insurance clients, Safelite has added language indicating that if you perform the work for the insurer’s policyholder, you are agreeing to do so for the prices set forth in the letter. Strangely enough, this utterly absurd proposition has found traction in courts in Connecticut, Washington and North Carolina.

The Problems Therein
There are so many problems with this effort at creating what many courts call “unilateral contracts” that it would be difficult to catalogue them all here. One big problem is that there is no consideration for the so-called agreement. Consideration is the thing that makes an unenforceable promise into an enforceable contract. For example, if you promise to send me a one-hundred dollar bill and I don’t promise to do anything in return, I can’t sue you for breach of contract because there is no contract. 

In the reimbursement announcement letters that Safelite sends out, what is it exactly that Safelite and the insurers are promising to do that they are not already required to do? If you bill at their rates, they say they’ll pay you “promptly.” In most states, however, there are laws that govern just how promptly the insurer has to pay claims. 

They also promise to pay you directly. That too is an empty promise because, if you have your proper assignment of proceeds signed by the customer, Safelite and the insurer are obligated legally to pay you directly because of the assignment. 

They also promise to pay at certain rates. This is again a big “so what?” given the fact that their contracts with their policyholders require them to make certain payments. While the letters often suggest that the reimbursement rates do not reflect the lowest amounts available, they never claim that the amounts reflect pricing at more than what the insurers already are contractually obligated to pay. 

No Contract
As a federal judge in Minnesota recently stated during a hearing when an insurance company tried to raise this claim, these letters are not even close to establishing a contract. He likened it to the judge telling the lawyers that if they walked out of his courtroom after the hearing, we would each owe him $100. Trying to create a contractual obligation by making acceptance based on something that the party is legally entitled to do or basing the supposed consideration on something that the party is already legally obligated to do does not cut it.

In light of the court cases elsewhere going the other way, however, it is important that glass shops not ignore those letters and the other communications received from or on behalf of the insurers. I recommend a multi-pronged approach. First, if you are not going to accept the insurance company’s reimbursement rates, I recommend sending the insurer and Safelite a letter in response to the pricing schedule letters indicating that you do not accept their pricing schedule, that you are legally entitled to perform replacement services for policyholders of the insureds and that the insurers are legally obligated to pay the full amount owed under the insurance policy. 

Next, when your company participates in the phone call to report the claim or when you receive the call from the third-party administrator asking if you will accept the state pricing, tell them no, that you will accept as payment the amount owed under the terms of the insurer’s policy, nothing more and certainly nothing less.

Finally, if, after sending your letters and refusing the pricing during phone calls, you still get a confirmation fax claiming that if you do the work, you accept the price, send still another letter explaining that unless they receive something in writing from your company, that you reject their pricing as you have in the past and that you insist that the insurer pay in accordance with their insurance policy’s terms. Do the work, bill the amount you want to bill and then do what you need to do to collect.

Activate!
It’s also important that you get active in your state and national trade associations. With some concerted effort and dogged determination, we can beat back this effort and continue to insist that insurers live up to the terms of the policies that they sell to consumers.

Chuck Lloyd is a partner in the Minneapolis law firm of Livgard & Lloyd PLLP. He has represented glass companies for more than 15 years. His opinions are solely his own and not necessarily those of this magazine. 

AGRR
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