[T]he state’s highest court has sided with a Vermont auto repair shop in its latest legal challenge to a national insurance company over claims the firm failed to pay enough to cover needed repairs to vehicles that had been in collisions.
The case has been working its way through the state’s legal system for about four years, starting in 2015 when Parker’s Classic Auto Works of Rutland brought suit against Nationwide Mutual Insurance Co., which is based in Ohio.
Mike Parker, the repair shop’s owner, said Monday he recently got a call from his attorney, Robert McClallen of Rutland, letting him know of the high court’s ruling.
“I was like finally, ‘Hallelujah,’” Parker said.
The suit against Nationwide was brought by Parker’s on behalf of consumers in instances where the insurer refused to pay the full amount of the repairs the shop made to vehicles.
It’s a practice known as “short-pay.”
The Nationwide lawsuit is part of an ongoing campaign by Parker’s Classic Auto Works in recent years involving similar claims against other insurance companies for collision repairs.
According to Parker’s website, the shop has broken away from a “direct repair program,” that the company says “become subject to insurance company demands such as the repair of parts that should be replaced, using after-market parts, or salvaged parts.”
The website added, “In our experience, these practices are done to improve the bottom line of the insurance company and offer no benefit or savings to the consumer. In fact, such actions can adversely affect the safety and value of the vehicle.”
In the Nationwide case, Parker sued for a little more than $40,000 in denied payments. The lawsuit listed more than 70 names of people who sought payment for vehicle repairs between 2009 and 2014.
In those cases, the lawsuit stated, Nationwide failed “to pay the full amount of the repair to the insured.” In each case, Nationwide paid the amount it believed it owed, but not the full amount sought by Parker’s.
“Each insured, in consideration of being able to take possession of his or her vehicle, assigned (Parker’s) the right to proceed against (Nationwide) in order to collect the amount due and owing for repair of the insured vehicle,” the lawsuit stated.
Nationwide, in court records, denied owing the money to Parker’s auto shop.
The Vermont Supreme Court, in a recent 14-page unanimous decision authored by Justice Karen Carroll, ruled in favor of Parker’s.
“With no definition of ‘damage’ in the policy, we construe this term consistently with general principles of the law of remedies, interpretations of the standard collision-insurance policy as a whole, particularly the limitation-of-liability clause,” the decision stated.
“We conclude that ‘damage’ here means the amount of money needed to repair an insured vehicle to preaccident condition,” according to the ruling, “not to exceed the value of the vehicle before the accident.”
It’s not Parker’s largest victory yet in his battle against insurance companies over short pays. He prevailed in 2015 in a three-year fight against Allstate for $53,000 in a lawsuit he brought on behalf of 70 consumers.
In fact, this is Parker’s fifth lawsuit against a national insurance company, and it’s the fifth time he’s won.
‘I’m five for five,” Parker said Monday.
Though, he added, the Nationwide case is the first to make it all the way to the Vermont Supreme Court.
Meanwhile, he has four other cases with national insurers still pending, including lawsuits against Progressive and Travelers.
And, he said, over the years he has reached several settlements with other insurance companies but can’t talk about those due to confidentiality agreements.
Parker said how the Vermont Supreme Court ruling will affect the other cases that remain pending remains unknown.
‘They were all waiting to see what was going to happen,” he said. “They were all hoping we were going to lose this.”
Parker started bringing such legal actions against insurance companies for “short pays” several years ago. Since then, some insurance companies have started paying for the needed procedures they wouldn’t have paid for in the past, according to Parker.
But, he said, others have taken different actions in response to his actions.
“Some insurance companies try to steer away from us,” he said. “They try to get people not to come here.”
But Parker said, he isn’t deterred.
“Everything we do is necessary,” he said, adding, “This is trying to get what was owed to begin with to bring the car back to pre-loss condition.”
McClallen, Parker’s attorney, could not be reached Monday seeking comment. Also, Eric Boron, a Buffalo, New York, attorney, listed in court records as lead counsel for Nationwide, did not return a call Monday seeking comment.
Marilyn Miller, executive director of the Vermont Vehicle and Automotive Distributors Association, said Monday she was still reviewing the details of the decision.
“I do know this has been something that Mr. Parker has been fighting for,” said Miller, whose organization is a trade association representing the interests of the auto industry, including new and used car and truck dealers as well as auto shops and parts facilities.
“I’m impressed that Mr. Parker has stuck with it this long and really saw it through to the end,” Miller said.
“I think this is a positive thing,” Miller added, “certainly for independent (auto shops) and for anybody in the business of repair when an insurance carrier is not willing to reimburse you what is a legitimate parts and labor cost.”
In 2017, a jury following a two-day trial in Rutland County Superior civil court also sided with Parker’s in its dispute with Nationwide, awarding the auto shop $41,737.
However, Judge Helen Toor later overturned that jury ruling, granting a motion for judgment “as a matter of law.” The judge stated that the insurance policies required the firm to pay “an amount [defendant] determined was sufficient to do the repairs,” according to the high court’s decision.
And, that judge ruled, those insured could not sue Nationwide for money that “were entirely within” the firm’s “discretion to award.”
The state’s highest court took a different view, ruling in part, that the policies lacked provisions allowing for challenges on how much was sufficient to be paid for a repair.
“The trial court interpreted the insurance policy, which was silent on the matter, to only require defendant to pay ‘an amount [defendant] determined was sufficient to do the repairs’,” according to the decision.
“We disagree with this construction,” the ruling added. “Just as we will not rewrite an insurance policy in favor of an insured, we also cannot rewrite a policy in favor of an insurer.”
And during the trial, the decision stated, Parker provided records for his charges.
“Mr. Parker, the owner of the repair shop, testified on direct examination to his experience repairing vehicles and to the billing and repair processes employed in his shop,” the ruling stated.
“He compared,” the decision added, “in some respects, the practices employed in his shop to those used by defendant’s claims adjuster.”
Michael Pieciak, commissioner of the Vermont Department of Financial Regulation, said Monday he didn’t see the decision as precedent setting beyond the policy at issue in the case.
The commissioner called it a “classic contract dispute,” in which the policy did not spell out some of the key terms, such as defining the word “damage,” so the high court went ahead and did that.
Typically, Pieciak said, such terms are laid out in great detail in policies and contracts.
“It just so happens in this case it wasn’t that clear,” the commissioner said.
Nationwide also contended it was not required to pay both “repair and labor costs” since the policy provided for payment of labor costs under the towing clause but not the “collision-coverage insuring” clause.
Justice Carroll, in the decision, rejected that argument.
“Labor is an indispensable component of the cost to make a repair,” Carroll wrote. “Moreover, defendant’s opening statement and the only witness that defendant offered at trial effectively admitted that the policy covers, to some degree, labor costs for making a repair.”
