Michigan TPA Code of Conduct Bill Passed Unanimously by State Senate
January 26, 2012

by Penny Stacey, pstacey@glass.com

The Michigan State Senate has passed legislation that could 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. The bill passed the Senate this morning with a vote of 38-0.

This was the third reading of the bill, S.B. 306, introduced by Sen. Joseph Hune, though the final Senate version had several changes from the original bill.

Industry reaction to the passage so far has been mixed. Some independent shop owners have said the code of conduct suggested by the bill needs to be strengthened.

"Work needs to be done in the House of Representatives to strengthen the code of conduct to ensure the referral process for non-preference work is equally distributed throughout to network members," says Shari Montgomery, owner and president of Pollack Glass in Lansing, Mich., and a member of the Independent Glass Association's Michigan Chapter, which has been closely involved with the legislation's development.

Still, she is pleased with the results so far. "We are ecstatic," says Montgomery.

She adds, "The Michigan Senate unanimously stood up in opposition to the unregulated opportunity of the TPA self referral and ignoring consumer choice."

Ron Overbeck Sr., co-owner of Auto One in Brighton, Mich., who also has devoted much time to working with other glass shops in the state on the bill, echoes Montgomery. "We're optimistic that we'll still get the end result that we need," says Overbeck.

Brian DiMasi, senior corporate counsel for Safelite, whose third-party administration arm could be affected by the bill, has a different concern about the bill and how it could affect the company's network in the state.

"The current version of the bill is significantly better than the original draft, but it still presents challenges," he says. "Consumers demand high-quality work from network shops. While any shop is free to apply to the SGC Network, network shops must have adequate liability insurance, warranty their work, provide high-quality and agree to fair and reasonable pricing."

Further, he questions wording that would mandate that "the third party biller will not close its network to new applicants if the network contains automobile glass repair or replacement facilities that are owned by or related to or affiliated with the third party biller."

"The current draft opens up the network to any shop regardless of quality," says DiMasi. "That eliminates the quality standards and that hurts consumers."

He also questions the reporting requirements that would be required of TPAs that are affiliated with retail divisions. "In addition, the current draft would require confidential claim detail be disclosed across the industry by insurance company and by repair shop," says DiMasi. "The insurance companies have expressed a significant concerns with this. In addition, every network shop would have their claim detail[s] disclosed to their competitors. Safelite Solutions would also be required to violate the confidentiality provisions in its agreements with insurance companies by disclosing their claim detail. We stand ready to discuss these challenges in the House."

This story is an original story by AGRR™ magazine/glassBYTEs.com™. Subscribe to AGRR™ Magazine.
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