Minnesota Court Upholds $400,000 Arbitration
Settlement in Alpine Glass vs. Farmers Suit
March 1, 2010
The U.S. District Court for the District of Minnesota issued an
order on Friday upholding an arbitration settlement of more than
$400,000 from Farmers Insurance and Mid-Century Insurance Company
for more than 1,100 "short-pay" claims filed by Alpine
Glass. The original suit by Alpine asked the court to rule that
it be allowed to engage in arbitration with the insurers to settle
the short-pay disputes; though Farmers had filed a counterclaim
alleging that it was not liable to Alpine, the court had ordered
that the companies should arbitrate the short-pay claims "in
a single consolidated proceeding," according to the most recent
opinion issued in the case. Farmers then motioned for the court
"to vacate that award," according to court documentsand
that motion also was denied with the most recent ruling.
Farmers had made several claims in its motion to have the award
vacated. Among these claims, the insurer alleged that Alpine had
violated Minnesota's anti-incentive statute, arguing that by promising
customers "that if an insurer did not pay Alpine's bill in
full, the customer would not be responsible for the difference."
Farmers had argued that this was a form of an incentive to encourage
the customer to purchase auto glass services, according to court
documents. The court ruled against this claim as well.
In addition, Farmers had argued that no assignments of proceeds
were made to Alpine Glass. (This is not the first time the assignment
of proceeds issue has come up. However, previously an insurer had
claimed that the assignment of proceeds clause could not apply to
a glass shop. Last summer, the Minnesota Supreme Court ruled that
it could.) (CLICK
HERE for related story.)
However, the court dismissed this claim as well, as part of its
denial of the motion, noting that it had reviewed the arbitration
records in the case.
"Having reviewed that record, the Court finds that Alpine
has established, by a preponderance of the evidence, that the 91
insureds did, in fact, assign their claims to Alpine. In every one
of the 1,120 short-pay claims that were arbitrated-including every
one of the 91 challenged claims-Farmers made a partial payment directly
to Alpine," writes the judge.
The judge goes on to point out that Farmers national claims manager
Michelle Keller testified that while an assignment specifically
is not required, a work order must be signed by the policyholder
before the invoice can be processed, and that Safelite Solutions,
Farmers' claims administrator, must "look for a signed payment
before it will send any payment directly to
an auto glass shop."
Farmers also had argued against the arbitrator's ruling that "Farmers
was paying a rate not based upon competitive pricing in the auto
glass replacement industry in Minnesota" in its motion for
the court to vacate the award.
However, the court ruled that under Minnesota's No-Fault Act, "an
arbitrator's findings of fact are 'conclusive.'"
Farmers went on to argue that the arbitrator should have looked
at each of the short-pay claims presented separately, but the judge
writes that one reason for arbitration in the state is to "decrease
the cost and complexity of litigation."
"The efficiencies inherent in the ability to present and consider
generalized evidence are the primary reason why the Minnesota Supreme
Court permits consolidation of no-fault claims in appropriate cases,"
Alpine is represented by Chuck Lloyd of Livgard & Lloyd LLP
in Minneapolis, along with Joshua P. Brotemarkle of Rabuse Law Firm
P.A. Steven Kluz of Stoel Rives LLP and Diane B. Bratvold of Briggs
and Morgan represented Farmers in the case.
HERE for full text of Friday's decision.
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