Protecting the Consumer - and You - BodyShop Business

Protecting the Consumer – and You

Whether it's health care or the collision industry, the bills California Sen. Jackie Speier sponsors always have one thing in common: doing what's best for the consumer. As luck would have it, what's good for the consumer is often good for the repairer.

You’re getting ready to board a plane to return home after a trip to investigate claims of human rights violations. You’re young and just starting your political career – you have your whole life ahead of you. Or do you?

You hear the sound of gunfire – gunfire that takes the lives of five of your associates.

You, however, are the lucky one – you’ve only been hit five times. But as you lie there waiting for help to come – 22 hours later – you wonder if maybe you would’ve been better off dead.

Sounds like something out of a movie, right? But for California State Sen. Jackie Speier (D-San Mateo/San Francisco), it was a reality. In 1978 while working as legal counsel to California Congressman Leo Ryan, Speier was part of a fact-finding group that accompanied him to Jonestown, Guyana. They were there to investigate claims that Americans were being held hostage by cult leader, the Rev. Jim Jones. The claims turned out to be true.

But it wasn’t until the conclusion of the trip, while getting ready to board a plane back to the States, that Congressman Ryan and four others in the group were shot and killed and Sen. Speier seriously wounded by gunmen from the People’s Temple cult.

Some people may have given up after such an ordeal, but not Speier. She went on to become the youngest member to serve on the San Mateo County Board of Supervisors, and in 1986, was elected to the State Assembly, where she served until 1996. An overwhelming election to the State Senate followed in 1998 (she garnered 79 percent of the vote).

Since then, Speier has had 59 bills signed into law by Gov. Gray Davis, and authored Senate Bill 1988, which requires the state to inspect autobody repairs in an effort to reduce the incidence of fraudulent repair work. Then, in the spring of this year, she introduced S.B. 1648, which would make it unlawful for an insurer to own a body shop. The bill has passed both the Senate and Assembly Insurance Committee and now goes before the full Assembly for a vote.

Although it’s not certain that this bill will become law, one thing is certain: Whether it’s health care reform or dealing with companies sharing customer information, Speier is driven to protect the rights of California consumers.

BSB: How did you get your start in politics?

Sen. Speier: “I think a lot of it has to do with the fact that from a very early age, my parents conveyed a sense of responsibility to community.

“I worked on my very first political campaign when I was 16 for then [California State] Assemblyman Leo Ryan. Then, when I got to college, I ended up interning in his office in the state legislature. I later got a part-time job [and] became a junior consultant to a joint committee. I worked for him when he was in Congress for a year.”

BSB: It was during your time working for Congressman Leo Ryan that you were seriously injured in Guyana and Congressman Ryan killed – what happened and how did it affect you personally and professionally?

Sen. Speier: “It was a congressional trip that [Congressman Ryan] undertook because many of his constituents had loved ones who had become members of this “church” É It was actually a cult called People’s Temple. The reverend of that temple – Jim Jones – had taken about 900 people to Guyana in South America. And we had made that trip to determine whether or not Americans were being held against their will. As it turned out, we found out they were – and many of them wanted to leave with us. At the airstrip, the congressman was assassinated, and I was shot five times.

“I was quite young. I was 28 years old, had just become a lawyer, had expectations that life was going to be full and long and came very close to losing my life. It certainly has molded the way I look at the opportunities that we all have to make a difference while we’re on this planet. It’s made me value life in way I probably wouldn’t have, had I not had that experience. It’s certainly been part of the driving force to make me pursue the work I have in public office.”

BSB: That work has included legislation that’s affected the collision repair industry. What brought this industry to your attention?

Sen. Speier: “I chaired the Consumer Protection Committee in the [California State] Assembly for five years. So my very first efforts started then. And I’ve made it an area of interest and developed an expertise in issues that relate to consumers É When I chaired the Consumer Protection Committee [from 1990 to 1995], I was troubled by the fact that anyone could get an auto repair shop owner’s license in California by simply filling out a form and paying $200. So to make my point, I actually got one. As a result, we somewhat changed that so it takes more than just $200 to establish yourself as qualified to own an auto repair shop.

“I remember when we had a press conference on it. I said, “You know, I know more about bath oils than I do about brake fluid.’ (Laughter from Speier.) Nonetheless, I opened Jack’s Auto Repair Shop.”

BSB: You’ve sponsored legislation that’s, in essence, been at odds with the interests of insurance companies.

Sen. Speier: “It’s not that I go out of my way to oppose the [insurance] industry. I feel it’s my job to protect the consumer. And oftentimes that clashes with the interests of insurance companies to enhance their profits and limit benefits to the consumer.”

BSB: Currently, the Automobile Club of Southern California owns a 19 percent interest in Caliber Collision Centers, and Sterling Collision Centers is a wholly owned subsidiary of Allstate Insurance, which plans to build centers in California next year. How did you get involved in Senate Bill 1648, which would make it unlawful for insurance companies to have a financial interest in autobody repair facilities?

Sen. Speier: “California Auto (the Automobile Club of Southern California, which offers auto insurance) came to me and told me that they were in the process of [obtaining interest in Caliber Collision Centers], and I said I’m really very disappointed to hear that because I think it’s a very anti-consumer activity. California Auto explained to me that they were doing it to prevent a situation that happened to them in Texas, where Allstate came in and basically squeezed them out by virtue of putting a lock on most of the auto repair shops.

“We’ve had in California a penetration of HMOs that’s unlike anything else in the country. And they’ve been very successful. In fact, 24 million of the 34 million Californians are in HMOs. What they do is negotiate with the local medical group, and they offer a capitated rate, which means that they’ll pay them, let’s say $30 per enrollee per month. And for that, you’ve got to provide all the health care. Whether they have open heart surgery or don’t come into the office at all, you’re going to get paid $30 a month.

“And what we’ve seen in California is a situation where, over time, those medical groups – who are being reimbursed at a rate that’s very difficult to make ends meet – É start to do things like delay offering care. So [rather than] give you the surgery this month, they delay it for few months. As things got worse, they started to deny care.

“I just see a similar situation occurring where insurers own the auto repair shop. There’s anti-steering laws, [but] they’re bogus in nature. They’ll steer insureds to their particular repair shops. And then all of a sudden, you’re getting repair work done with aftermarket parts or perhaps having to wait a long period because there’s a backup of vehicles. I just see it as vertical integration that doesn’t bode well for the consumer.”

BSB: Have you ever been in an accident and had your car repaired?

Sen. Speier: Yes. My experience was good. I actually knew the auto repair shop owner, which might have helped. (Laughter from Speier) I was more savvy. I think most consumers aren’t going to want to cross their insurance company because they fear that if they don’t do what the insurance company suggests, that their premiums will go up. And the steerage occurs in a very subtle or maybe not-so-subtle way: The insurance company says you get to go wherever you want to go, but if you go to our auto repair shop, we won’t send out an adjuster, the work is guaranteed and you’ll have your car back in five days. Well, why wouldn’t you want to go to the one that’s been hyped – the one that’s providing all of these benefits?”

BSB: What’s the biggest problem in the collision repair industry today?

Sen. Speier: “I’m deeply troubled there’s such a high incidence of fraud. É Now we have a free inspection program for consumers [through the Bureau of Automotive Repair]. What’s interesting about this inspection program is it’s been going on now for about a year, I think, and about 600 vehicles have been inspected. And in 43 percent of the cases, there was some level of fraud that averaged about $600 and added expense to the consumer – in which a part was invoiced as having been put on the vehicle or labor was invoiced as having been done, and it hadn’t been done.

“And that to me is indicative of a couple of things. One, that the shops are being squeezed to the point where if they’re part of direct-repair programs in California, they feature an hourly rate that’s below the average, so they have to make it up somewhere else. Or the fraud that goes on has been a wink and an acceptable behavior in the past, which it certainly shouldn’t be.

“I guess the other thing that’s happened, insurance companies don’t inspect work after it’s done. And I think they have an obligation to do that. You know, they’re concerned about fraud on the one hand, but then they don’t want to put any effort into trying to diminish it. And then they just fold it back into their premiums. We as consumers end up picking up the tab in the end.”

BSB: What would you like to happen as a result of the BAR findings?

Sen. Speier: “I’d like to have every consumer go into an autobody repair shop in California with the confidence of knowing that the job is going to be done to the highest standards, free of fraud and that consumers will get what they paid for.”

BSB: How do you see that happening?

Sen. Speier: We’ve imposed more stringent regulations, greater penalties. And I also think it’s very important for the collision industry to be able to survive as small businesses, and I think they’re really threatened by efforts like Southern California Auto or Allstate to buy them up.

“The other thing that used to happen if an auto repair job was done poorly, the insurance company would just drop that repair shop from their list. Well, imagine what’s going to happen once they own them. There’s a conflict of interest. So protection of the consumer is lost in that.”

BSB: Tell me about your typical work day.

Sen. Speier: “I start at around 7 “o clock. I leave home and drive to Sacramento – about a two-hour drive. I’m in Sacramento all day, either chairing the insurance committee, serving on committees or meeting with constituents or interests that have measures before the legislature or school groups that are visiting the capitol, or CEOs who have a particular issue that they want to raise. Then I leave around 5:30, get home by 7:30 and then have 2-1/2 meaningful hours with my family.”

BSB: Do you ever have time off?

Sen. Speier: “I make sure I have days off, and I spend them with my family doing what every average American family does. Watch soccer and baseball games and have barbecues and invite friends over.

“I play golf. I like to exercise when I make the time for it. So I like to get out and walk, do things with my children, who are ages 7 and 13.”

Who’s your role model?

Sen. Speier: “Well I actually did a speech on role models, and I had 10 of them (laughter). You know I like to tell young people in particular about the power of people like Rosa Parks, who questioned the status quo and, as a result ,transformed this country by sparking the civil rights movement. She was a very modest, diminutive seamstress who worked in a factory in Birmingham, Ala. This underscores that you don’t have to be a Ph.D. and a 6-foot-tall man to accomplish great goals.”

BSB: What else is on your legislative agenda?

Sen. Speier: “I’m doing quite a bit on salvage. In California, they haven’t been licensed. I have a bill that will require them to be licensed, require a new form of branding in the vehicle, require that cars that are purchased at salvage pools and then repaired be inspected by either the Department of Motor Vehicles or the California Highway Patrol before they could be resold. Then it requires the DMV to establish a database so consumers can log on to that database and by VIN, evaluate the history of a vehicle they may be purchasing.”

BSB: What’s your favorite part of your job?

Sen. Speier: “Coming up with an idea, translating it into a bill, convincing my colleagues to support it, the governor to sign it and changing the quality of life for 34 million people in the state. I do a lot of work on consumer protection. I also do a lot of work on health care and insurance in general.

“One of the bills that became law recently in California was one that provides a discount for prescription drugs for senior citizens. Reducing the cost of prescription drugs for seniors by 20 to 25 percent is substantial for persons on fixed incomes. There’s nothing I think more thrilling than to have that kind of an impact on people’s lives.”

Writer Debbie Briggs is managing editor of BodyShop Business.



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