The Minnesota Department of Commerce, Insurance Division, has entered a settlement agreement with San Antonio, Texas-based USAA Casualty Insurance Co. that provides for the USAA to pay a civil penalty of $50,000 and ensure that any independent adjuster engaged there to adjust automobile glass claims is properly licensed in the state.
“The Minnesota consent order includes issues raised by the [Minnesota] Department of Commerce following a review of USAA’s automobile glass claims process. The department did not reach a final conclusion on any of these issues, nor was there a hearing on the matter,” says Roger Wildermuth, an USAA spokesperson.
“Although we did not agree with the department’s findings, we were able to reach a negotiated settlement that allowed us to continue working with the department to fully address the issues raised,” he adds. “We remain committed to providing world-class service to our members with auto glass claims.”
Safelite Solutions serves at the company’s third-party automotive glass claims administrator in the state, according to Wildermuth.
As a part of the settlement, USAA has agreed to “review its practices and procedures and update them to ensure that the conduct of its Minnesota glass administrator is effectively monitored.”
Guaranteed average invoice agreements must no longer be used, says Martin Fleischhacker, assistant commissioner of enforcement. This means the third-party administrator can no longer guarantee the processing of USAA’s replacement glass claims will average a particular amount or less during a specified period.
“[USAA] shall ceases and desist from advising insureds they may be balance-billed by non-preferred vendors unless [the company] has information supporting the assertion for a certain vendor,” according to the settlement.
The Minnesota Department of Commerce reviewed USAA’s glass claim files and alleged USAA’s agent [Safelite Solutions] engaged in adjusting activities in Minnesota while not licensed as an independent adjuster.
The commissioner also said that, “[USAA] and/or its agent engaged in an act or practice of coercion, incentive, or inducement toward insureds selecting certain non-preferred glass vendor and [USAA] failed to effectuate fair settlement of glass claims in which liability had become reasonably clear.”
USAA was advised of its right to a hearing and appeal any adverse determination after the hearing. The company waived these rights.
In February of last year, the state Commerce Commissioner entered a settlement with Auto Club Group. The company agreed 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.
In this settlement, the Commerce Commissioner ordered AAA to ensure that its glass claims adjusters are licensed to do the business as independent adjusters.
After the order was signed, Safelite Group and Safelite Solutions argued its case on the state level before taking it to U.S. District Court. The glass repair and replacement giant filed a petition for writ of certiorari with the Appellate Court of Minnesota. The Appellate Court dismissed the case saying “certiorari review is not available.”
Safelite Group and Safelite Solutions then asked the U.S. District Court for a declaratory judgment that the Minnesota Commissioner of Commerce’s enforcement actions violate the United States Constitution and for a permanent injunction prohibiting state officials from enforcing the statute to restrict Safelite’s ability to conduct business in the state without “affording Safelite notice and an opportunity to be heard.”
The case is still pending in the Federal Court.
Safelite Group and Safelite Solutions had not yet responded to a request for comment at press time.
To read the consent order, click here.