Michigan Debate Over TPA Requirements, Code of Conduct, Continues
June 16, 2011

The Michigan State Senate's insurance committee has been reviewing a bill 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™ magazine.

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 of conduct."

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 … a 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 affiliated with … 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."

 

Need more info and analysis about the issues?
Subscribe to AGRR Magazine.