The Minnesota Department of Commerce, Insurance Division, has entered a settlement agreement with the Auto Club Group that provides for the Auto Club Group to pay a civil penalty of $150,000 and “cease and desist from using Safelite Solutions, or any other subsidiary of Safelite Group Inc. as its administrator of automobile glass claims in Minnesota,” according to the settlement agreement.
The Minnesota Department of Commerce, Insurance Division, reviewed 125 automotive glass and accident claim files, which led to its decision, according to the settlement agreement.
“It is further ordered, pursuant to Minn. Stat. 45.027 subd. 5(a)(2014) that respondents shall cease and desist from informing insureds about any alleged benefits of using respondents’ preferred glass vendors prior to stating the required advisory pursuant to Minn. Stat. 72A.201, subd. 6(14)(2014),” according to the settlement agreement.
The Auto Club Group cannot inform insureds that they “may not receive a proper warranty from and/or may be balance-billed by non-preferred glass vendors, unless respondents have specific information proving the assertions to be true for a certain vendor,” the state insurance commissioner writes.
“It is further ordered that respondents shall within 30 days of the effective date of this order develop practices and procedures to ensure that each and every independent adjuster, as defined by Minn. Stat. 72B.02, subd. 4 (2014), engaged by respondents to adjust Minnesota claims is properly licensed in Minnesota,” according to the settlement agreement.
In its Consent to Entry of Order, the Auto Group and Auto Club Group Property-Casualty Insurance Co. writes, “that she/he knows and fully understands its contents and effect; and that he/she has been advised of respondents’ right to a hearing in this matter and expressly waives that right; that respondents have been represented by legal counsel in these matters, or have been advised of their right to be represented by legal counsel and expressly waive that right; and that he/she consents to entry of this order by the [state insurance department] commissioner.”
After the order was signed, Safelite Group and Safelite Solutions, as related parties to the consent order, filed a petition for writ of certiorari with the Appellate Court of Minnesota.
“The grounds for review are that the decision and the actions taken by respondent Minnesota Department of Commerce are arbitrary and capricious and not in conformity with law,” according to the petition for writ of certiorari.
“Safelite is not an insurance company and is not an insurance adjustor,” according to the petition for writ of certiorari. “On January 8, 2015, the respondent Minnesota Department of Commerce issued a consent order to Auto Group Property-Casualty Insurance Co. and Auto Club Group. Auto Club is a licensee of the Department of Commerce and is one of the insurance company clients of Safelite in Minnesota. The order, among other things, orders that Auto Club ‘shall cease and desist from using Safelite Solutions, or any other subsidiary of Safelite Group, as their administrator of automobile glass claims in Minnesota.’ Relators are not parties to the order, and were provided with no notice of or opportunity to be heard on the matter. The Department of Commerce issued the order even though the department failed or refused to hold a hearing or to make findings of fact or conclusions of law.”
Safelite’s attorney listed three specific issues the company proposed to be raised on appeal:
“A. Where a valid, enforceable and legal contract exists between Safelite and one of its insurance company clients, and the contract contains no provisions that violate any requirements of Minnesota law, does the Department of Commerce exceed its authority by ordering the insurance company client to terminate the contract in perpetuity and effectively blacklist Safelite as to that insurer?
B. Is the Department of Commerce’s January 8, 2015 order arbitrary and capricious, unsupported by substantial evidence in the record, contrary to law, or affected by procedural irregularities?
C. Did the Department of Commerce exceed its authority and err by issuing its January 8, 2015 order as to Safelite without notice to or consent of Safelite, without conducting a hearing and without making findings of fact and conclusions of law?”
The appellate court reviewed Safelite’s petition for writ of certiorari and issued a decision on February 10, 2015.
“This court questioned whether the January 8, 2015 consent order is a quasi-judicial decision reviewable by certiorari and whether Safelite’s proposed issues are properly reviewed for the time on appeal,” writes a judge for the appellate court. “The commissioner and Safelite filed informal memoranda. … The three indicia of a quasi-judicial action reviewable by certiorari are: 1) Investigation into a disputed claim and weighing evidentiary facts; 2) Application of those factors to a prescribed standard; and 3) A binding decision regarding the disputed claim. … The failure to meet any of the three indicia of quasi-judicial acts is ‘fatal’ to a claim that the proceedings are quasi-judicial.
“[B]ecause the January 8, 2015 consent order did not involve the weighing of disputed evidentiary facts and the application of facts to a prescribed standard, the first two MCEA indicia are not met,” the judge writes in his decision. “Finally, the third MCEA factor is not met because Safelite was not a party to the January 8, 2015 consent order and the order is not binding on any claims that Safelite may have. … Because the January 8, 2015 consent order does not meet any of the three indicia of quasi-judicial act under MCEA, certiorari review is not available. … The writ of certiorari is discharged and this appeal is dismissed.”
“The appellate court looked it over and we were surprised at how quickly they ruled on the decision,” says Rick Rosar, owner of Minnesota-based Rapid Glass, who is trying to bring attention to this issue. “The appeal was quickly dismissed.”
“We just keep beating the drum and sending the complaints into commerce,” he says. “Many times the commerce department is understaffed. We just continually send the department our complaints. After so many years, eventually someone hears us and is able to take action.”
According to Rosar, other insurance companies could review the consent order and take action.
“This is just the beginning of it,” he says. “Many more insurance companies will take a look at this consent order and have questions about what their third-party administrator is doing.”
Safelite had not yet responded to a request for comment at press time.
To view a copy of the consent order, click here.