Shops can sometimes feel targeted with a liability bull’s-eye
Las Vegas—The $42 million John Eagle lawsuit judgment last year sent ripples throughout the collision repair industry, as more shop owners and managers recognized the risk of not following OEM repair procedures.
A panel discussion at the recent SEMA Show discussed how to reduce a shop’s risk by following OEM repair procedures and with thorough documentation. Despite insurer pressures to limit severity, repairers must adhere to those procedures, the panel urged attendees.
“The manufacturer is the expert. Who knows better how that car is built or how it should be reconstructed after a collision?” said Ron Reichen, who owns Precision Body and Paint, with three Oregon locations. “You have to follow everything. You have to tool up, to train up, or otherwise you simply won’t be in business. It is that critical.”
Reichen was joined on the panel by Burl Richards, president of the Auto Body Association of Texas, and Shaughn Kennedy, client advisor for Intrepid Direct Insurance. David Willett, general manager of Automotive Aftermarket for Intrepid Direct Insurance, moderated the discussion, which was part of the Society of Collision Repair Specialists (SCRS) Repairer Driven Education series at the SEMA Show.
‘Putting the puzzle pieces together’ in an investigation
Multi-million-dollar lawsuits aren’t filed for improper repairs by themselves, Kennedy pointed out; they come from serious injuries or deaths suffered in a subsequent collision when an improper repair is suspected. An attorney will want to know everybody who touched the car.
“They’re trying to put the pieces of the puzzle together, to look to see if you had any involvement or contributed to it.”
Upon receiving an attorney’s notification, repair shop management should consult with the garagekeeper’s insurer, which can best assist in the defense of a claim. Kennedy recalled one case he worked in which a repair shop was suspected of failing to reconnect a front impact sensor after repairing light front end damage on a car that later hit a tree, killing its two occupants.
The airbags did not deploy, and although the sensor was unplugged, after digging into the SDM (“black box”) data provided to him by the law firm, Kennedy discovered the connector was not mistakenly left disconnected but was instead torn loose as part of the collision.
“Once we came up with this information, we took it to the attorneys, and this dealership repair shop walked away from the claim,” he said. “It now became an issue with the OEM on the design of the airbag system.”
Protect against litigation with thorough documentation
A repair shop can be better protected against litigation by building a file for each vehicle repaired, with repair instructions, parts lists, and photos, Kennedy said. “Make sure there are quality control processes, and make sure techs are repairing the right way. And make sure you’re scanning; it’s the best way to protect yourselves.”
Pre- and post-repair scanning is so important that Reichen said he would “eat” the cost of scanning before foregoing it, should an insurer balk at the cost.
“Starting at the first point of contact in our facilities, we photograph the car intensely,” he said. “We turn the key on and take a photograph of the dash to show the mileage and what fault codes exist. When you go to the doctor, from the moment you walk in the door, they document everything and by the time you see the doctor, you may have seen three different people. So just envision that vehicle is a patient, and we’re the doctor. Question the client: ‘How many seatbelts were in use?’ ‘Did you spill a mocha?’
Because the OEM may have revised the repair procedure even since the shop performed an identical repair last week, they must be researched for each repair, Reichen said. Shops should also document the welder setup, performing a destructive test on a coupon, writing the RO number on it, and photographing it for the file.
Willett cautioned that DRP agreements often leave the shop exposed in a lawsuit if corners are cut to keep costs down. “A lot of times, there is verbiage in the contract holding them harmless, and at the same time, they’re telling you how to do it.”
For today’s collision repair industry, Willett said there are parallels with the heavy-duty tire retreading industry, which was seen as high risk and had some multi-million-dollar losses of its own. Industry associations later led a push for technician training, non-destructive testing, and tracking of used-tire casings to minimize liability. Today, retreaders that follow those recommendations provide a product with an “error rate” similar to that of new tires.
Strategize to get paid to do the job correctly
Richards said getting reimbursed properly starts with asking to be reimbursed for each repair procedure. “Sometimes you have to be creative,” he said, noting that when his shop emails a supplement to an adjuster, it attaches a copy of the OEM position statement and copies the customer.
“Make sure your client knows what’s going on, because if the insurance company has an opportunity to talk to them before you do, they are going to spin it a whole different way.”