Farmers Insurance Ordered to Pay Minnesota Auto Glass
Company more than $1.2 Million for Short Pays
The following press release was issued today by Livgard & Rabuse,
In a case that has generated considerable interest in the automobile
glass and insurance industries, Farmers Insurance has been ordered to
pay Minnesota based Glass Service Company more than $1.2 million for previously
short paid glass claims. In a dispute that first reached the courts in
2002, Farmers has lost four successive arbitrations resulting in awards
totaling $1,239,258.88, representing more than 90% of what Glass Service
sought in the arbitrations.
Farmers originally contended that Glass Service should be forced to arbitrate
each of the more than 5700 disputed invoices individually. The Minnesota
Court of Appeals ruled that Glass Service could not consolidate the invoices
for purposes of mandatory arbitration under Minnesota's No-Fault Act,
acknowledging that the procedure resulting from its decision was neither
efficient nor cost effective. The Minnesota Supreme Court, however, granted
review of the case and ultimately concluded that the disputed invoices
could be grouped for arbitration if the trial court found certain criteria
were met. The court then sent the case back to the trial court to determine
how many arbitration hearings should be conducted.
The Ramsey County District Court settled on eight arbitrations, based
upon the eight different glass prices Glass Service charged to Farmers
during the time Farmers was short paying Glass Service's invoices.
The first arbitration covered invoices where glass was billed at NAGS
list minus 14%. In that proceeding, Farmers was ordered to pay Glass Service
$158,109.82. The second arbitration was for invoices where glass was billed
at full NAGS list price. There, Farmers was ordered to pay Glass Service
$324,152.91. The third arbitration covered invoices billed at NAGS list
plus 35%. In that proceeding, the arbitrator awarded Glass Service $434,035.93.
Farmers sought to have the district court set aside the first three arbitration
awards. After extensive briefing and oral argument from the parties' attorneys,
the Ramsey County District Court rejected Farmers' application and directed
that judgment be entered against Farmers in favor of Glass Service. In
addition, the court awarded interest on the amounts of the arbitration
awards dating back to April of 2002 when Glass Service first demanded
arbitration. Farmers is appealing that decision to the Minnesota Court
Most recently, a fourth arbitration has been concluded on those invoices
where glass was billed at list plus 43%. In that instance, the arbitrator
has awarded Glass Service $322,960.22. Interest dating back to 2002 has
also been awarded.
With interest, the amounts awarded to Glass Service now exceed $1.4 million
and are growing daily as interest accumulates.
Chuck Lloyd of the Minneapolis law firm of Livgard & Rabuse, Glass
Service's attorney throughout this process, said "These awards and
the subsequent court order make it clear that insurance companies don't
get to unilaterally set reimbursement rates.
As Farmers is learning, the amount owed is the amount dictated by the
insurance policy, not some arbitrary lesser amount the insurer simply
wants to pay."
Chul Kwak, former General Counsel of Glass Service, said, "It's gratifying
that the arbitrators are seeing these disputes as we see them, particularly
given the fact that we offered to settle these claims for far less than
what the arbitrators awarded. For whatever reason, Farmers never responded
to our offers."
With respect to Farmers' appeal, Lloyd stated: "We fully expect the
trial court's decision confirming the awards to be affirmed on appeal
and that we will collect the amounts the arbitrators and the courts have
said my client is owed along with the interest that continues to accumulate."
Glass Service is also seeking to collect its receivables from other insurers
and fully expects to continue having success in its efforts.
Stay tuned to glassBYTEs.com for more information on the decision and
a link to the ruling when it becomes available on the court website.