Nearly four years after filing two separate
"assignment of proceeds" cases against Nationwide on behalf of two
customers, Joe Pastorek of Joe Pastorek’s Body Shop in Sylvania, Ohio, has
emerged victorious.
The first case, filed in October 2007, involved a
customer of Pastorek’s who was a third-party claimant and insisted on OEM parts
for his 1997 Lexus ES 300. According to Pastorek, Nationwide refused to pay for
the OEM parts, insisting on using "NWCPP" certified aftermarket
parts. Pastorek also says they refused to pay his labor rate (which was
$42 per hour at the time) and paint and materials rate ($25 per hour).
Pastorek’s final bill was $424.64 higher than Nationwide’s, and the insurer
refused to pay the difference.
According to Pastorek, who has three employees and
$300,000 in annual gross sales, Nationwide argued that his charges were
unreasonable and unnecessary. Nationwide also said their aftermarket parts had
a lifetime guarantee, versus the OEM parts, which were guaranteed for only one
year or 12,000 miles.
"Our argument was, ‘Have [the aftermarket parts]
ever been crash tested?’ and ‘Are they guaranteed for crashworthiness?’ I based
the answer to those questions on a previous deposition by an aftermarket
executive who said, ‘No, they’re not,’" said Pastorek. "My argument
is, ‘If you want to test them for material composition, tensile strength and
crashworthiness just like the OEs do, and you can guarantee them like the OEs
do, then I’ll be more than happy to use them.’ I prefer to use only OE parts,
unless my customer specifically requests something else."
Pastorek said that Technical Service Bulletins (TSBs),
warranties and service manuals he wanted to use to support his case were thrown
out because the court called them "hearsay." Still, Pastorek argued
for repairing vehicles per OEM recommendations.
"In the Lexus TSB, it tells you to use only OE
bumper reinforcements because they can’t guarantee, if you use any other part,
that the vehicle will maintain the same NHTSA crash rating," he said.
"That’s a pretty strong argument.
"When I fix a vehicle, I don’t just guess. I look
things up. If there are any concerns, if I can find them in TSBs or repair
manuals, then I have something to go on and build my estimate based on those
TSBs or manuals."
A dealership body shop manager whose shop was on a DRP
with Nationwide was called in to testify against Pastorek. Pastorek claims the
DRP shop manager admitted that he works for the insurance company, not the
vehicle owner.
The jury voted 6-2 in favor of Pastorek. They also wanted
to add to the suit monies to cover Pastorek’s lawyer’s fees, court costs and
expenses, but Pastorek said Ohio law doesn’t allow for that. All told, he spent
$10,000 of his own money on both cases.
Case No. 2
The second case was filed in April 2008. Pastorek says
that it was similar to the first case, except that he had begun invoicing for
paint and materials, creating an itemized bill for all materials used. There
was also a disagreement between Pastorek and Nationwide over a wheel that was
replaced. Pastorek claims that Nationwide believed the wheel had not been
damaged in the wreck, and even if it had, a reconditioned wheel should have been
used.
"I couldn’t use the GM bulletin in court, but you
know as well as I that an OE wheel can’t be repaired if any of the materials
have to be removed or replaced," says Pastorek. "That’s why GM
recommends replacing it with an OE wheel, which is what we did."
According to Pastorek, Nationwide brought in another DRP
shop to testify against him and say that his labor rate was unreasonable. The
DRP shop also addressed color, sand and buff.
"They said it was necessary but we can’t charge for
it because the insurer won’t pay for it," says Pastorek. "They said
it was part of the refinish process, so they don’t charge it as a separate line
item because it’s already included in the refinish time. If they had read the
P-pages in any of the three estimating systems they used, they would have seen
that every one has a page that says it’s a separate item and needs to be
charged separately."
The jury once again sided with Pastorek, only giving one
day of car rental back to the insurer because the customer picked up the
vehicle the day after it was done. According to Pastorek, the jury made their
decision because he came across as working for the customer, not the insurer.
"The jury foreman said he asked the jury if they had
an accident, would they take it to Pastorek’s, and everyone raised their
hand," Pastorek says. "DRP shops’ whole way of doing business is to
do what insurers say and hope they send them business."
Pastorek claims both DRP shops that testified against him
said in court that if they ever got a customer off the street who was not
insured but wanted them to fix their car, they would charge them more than if
they did have insurance. If the customer had insurance and requested only OEM
parts, they would have to write aftermarket parts per the DRP agreement and
give the customer the choice of either arguing with the insurer or paying the
difference.
Two years ago, Pastorek sued Nationwide for the third
time over their insistence on aftermarket parts for a third-party claimant’s
leased 2007 Honda CRV. According to Pastorek, the customer’s lease
agreement stated that "if OEM parts were not used, the customer would be
charged for the loss in value."
"She demanded OE parts and Nationwide refused,"
says Pastorek. "We showed them the lease agreement and they didn’t care."
The case was settled for the full amount two days before
being heard.
Fearing Steering
Asked if he fears being steered against by Nationwide as
the result of this litigation, Pastorek said no.
"They already do, so I don’t care. I’ve built up a pretty strong customer base over
the last 41 years, and [my customers] know I’m not willing to compromise on my
repairs," Pastorek says. "If they want OE parts, they’re going to get
them, either new or used. I strive to make the job look better than it did when
it came in. But I don’t charge to make it better – that’s just my own personal
pride when I do a job."
Assignment of Proceeds
Pastorek’s advice to other shops that feel that there is
no other recourse to recover funds other than to sue an insurer via assignment
of proceeds is, number one, to seek legal advice. Two, choose wisely the
customers you want to get involved.
"The customers I have are very loyal and outspoken
when it comes to what they want on their vehicles," he says. "Some
customers will succumb to insurer pressure, and those are the kinds of
customers I would not take to court because they’re going to get called in and
that will probably only agitate them and you’ll lose them."
Pastorek also recommends bundling three to five cases
together to save on costs, and take them all to the same court. Once a
favorable decision has been reached, the shop, Pastorek says, has something to
use against the insurer.
"I really think that every shop needs to get at
least one decision from an insurer so they can show that they’re the one who
owns the shop," he says. "I am not owned by an insurer. The name on
the building is ‘Joe Pastorek’s Body Shop,’ not ‘Nationwide’s Shop.’ I will set
the prices based on my expenses and what I think allows me to make a fair
profit. I’ve been here for 41 years and I’m still in business, so I must be
doing something right because my customers keep coming back, despite all the
steering and badmouthing I get from insurers. Even as much as they steer, my
customers will tell them where they want their vehicles fixed and that’s why I
stay busy."
Who’s the Customer?
Pastorek also talked about the danger of relying on too
much insurance work, citing two local shops he says were "Progressive
buddies" whose work for them comprised 30 to 35 percent of their total
volume.
"Progressive ended up yanking all their DRPs except
for two major shops, so they lost 30 to 35 percent of their business," he
says. "The problem is they thought the insurer was their customer, but
they’re not. If you satisfy the customer, they will come back. It seems DRP
shops’ idea is one-and-done, get it in and get it out and make as much money as
you can because you’ll never see the customer again. When I get a customer in
here, I want them to come back if they ever get hit again or if their kids get
in a wreck. I have customers who tell me I fixed their car 20 years ago and now
their daughter is driving and she wrecked her car. If you do a good job and
work for the customer, you won’t have to worry about making deals with
insurers.
"My business is to repair cars wrecked in
collisions. The insurance company’s job is to sell insurance policies and
indemnify those policies when a customer makes a claim. Those are two separate
businesses. I don’t care what insurers think about fixing cars. They sure as
heck don’t care about what I think when it comes to selling insurance. I’ll
stay out of their business if they stay out of mine."
Nationwide has 30 days to file an appeal, but Pastorek
feels confident the decision will stay.
"The judge overruled all their arguments
over why ‘assignment of proceeds’ was invalid, so it’s pretty solid," he
said. "If they ever beat the assignment of proceeds, it would take away
the right of a shop to sue for the customer, and that would be huge for
them."
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