A small claims court in Iowa has dismissed charges by Travelers Insurance Company against O’Mara Auto Body of Martensdale, Iowa. These charges included violating a contract, overcharging, and charging for repair procedures that the insurer claimed are not “usual and customary” in the industry. The court ruled, among other things, that the shop’s charges were reasonable and necessary.
In the repair of a 2009 Dodge Journey, O’Mara Auto Body collected $333.69 from the customer for supplemental repairs, then billed Travelers for that amount. In a letter from Travelers’ attorney, the shop was made aware of Travelers’ contractual requirement that a shop contact them for approval before any supplements are performed – which is stated at the top of their estimate. However, O’Mara Auto Body does not have a contract with Travelers, a point that owner Tom O’Mara subsequently made in court. The court ultimately ruled that just because an estimate says no supplements will be paid without prior approval doesn’t mean the shop has a contract with the insurer.
“If you are a DRP shop, there is a contractual relationship, and you would have to follow the contract,” says O’Mara. “I do not work for any insurer; I work for the customer.”
The letter also stated that O’Mara included double charges.
“Your invoice includes 1.4 hours of labor at $58 per hour for ‘R&I A/C condenser…’” it read. “This work is included in the line item entitled, ‘Support, Radiator…” billed at 6.6 hours. You billed the 1.4 hours twice. Travelers demands that you reimburse this $81.20.” Travelers also said that type of work and the associated cost was not “reasonable and customary” in the industry.
Another charge Travelers stated was not reasonable and customary was “Finish Sand & Buff to Acquire OE Finish,” billed at 2.9 hours at $58 per hour. Travelers then asserted that O’Mara “fraudulently” charged for paint materials included in the “unnecessary” task of finish, sand and buff – 2.9 hours at $30 per hour included in the $700.40 total paint materials.
Finally, Travelers stated that O’Mara charged one hour for “Detail & Cleanup,” another charge they said was not customary or reasonable, and demanded reimbursement of the $58 charge.
“The precedent has been set in Iowa. Shops can charge for the items I was sued over, and insurers cannot force a non-DRP shop into using their estimating system,” says O’Mara about his victory. “I would like to thank Erica Eversman and Ray Gunder for getting me headed in the right direction.”
