Michigan Debate Over TPA Requirements, Code
of Conduct, Continues
June 16, 2011
The Michigan State Senate's insurance committee has been reviewing
that would place several requirements on third-party administrators,
including the addition of a code of conduct by which those that
also provide auto glass services would have to abide in order to
maintain both services. While a representative from bill sponsor
Sen. Joseph Hune's office says the bill may not make it through
the process by the end of June, before the session takes a lengthy
recess, Hune does plan to revive discussions on the legislation
in the fall.
"He does plan to bring some groups together, including Safelite,
independents and insurers, to get them together to try and figure
out something," a spokesperson for Hune's office told glassBYTEs.com/AGRR
Independent glass shop owners in Michigan remain hopeful, according
to Ron Overbeck, co-owner of Auto One in Brighton, Mich. "We're
hopeful, and I fully expect that it will [make it through],"
says Overbeck. "[We have a group] of about 130 glass shops
across the state of Michigan, and each glass shop has been in personal
communication with their senators in their respective districts
and other senators, so we've had a pretty comprehensive e-mail campaign.
I believe strongly as soon as we can get into the Senate that we'll
get a positive vote."
Safelite officials have expressed opposition to the bill. In
its current form, the bill is overreaching and would effectively
legislate competition. As such, Safelite cannot support the bill
as drafted, and we intend to meet with lawmakers and the bill proponents
in the coming months to discuss, says Brian DiMasi, Safelite
senior corporate counsel.
Overbeck points out that the Michigan bill is different than much
of the legislation that has been debated in other states in recent
months. "The difference is that [under this bill companies
with retail divisions] can still be third-party administrator[s],"
says Overbeck. "[They] just would have to operate under a code
Under the text of S.B. 0306, insurers would be prohibited from
permitting a TPA to also provide auto glass services for the insurer
"unless the third-party biller adopts and follows
code of conduct" that complies with other provisions in the
bill. Among these provisions are requirements that, if an insured
states a preference of auto glass shop and that shop is listed on
the insurer's network, no other facility shall be suggested.
Likewise, when no preference of shop is mentioned or if the insured's
preference is not on the network, the TPA would be required to suggest
at least three auto glass repair or replacement facilities; the
three shops provided would be suggested on an "objective basis
that alternates between [sic] all automobile glass repair and replacement
facilities in the network and that is designed to not give a preference
to glass repair or replacement facilities that are related to or
the third-party biller that has responsibility
for suggesting the glass repair or replacement facility to the insured."
Additionally, the code of conduct would include provisions that
the TPA not promote or otherwise discuss its own or any affiliated
auto glass facilities, "including, but not limited to, discussions
concerning national warranties, deductibles, waivers or cash pricing
offered by those facilities."
Finally, such TPAs also would be required, under the possible legislation,
to file a copy of several documents with the insurance commissioner
on a monthly basis, including: the script used for auto glass repair
and replacement claims; statements of ownership and all TPA contracts
with insurers; total number of auto glass repair or replacement
claims for each insurer that were processed, administered or monitored
in the preceding month; details on the claims such as whether they
were repairs or replacements; and the names of the shops that received
referrals during the month.
While numerous states, including Texas, Arizona and Connecticut,
have reviewed auto glass-related bills this year, Overbeck offered
some tips for others hoping to become a part of the legislative
process. "The first thing you've got to do is you've got to
make a commitment that you're going to get this done," he says.
"There's never enough time unless you're actually doing it."
He adds, "There's no silver bullet. Legislators want to hear
from their constituents and you've got to get out and talk to them."
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