A battle is brewing between the Minnesota Commerce Department and one of the state's largest auto-glass repair firms over alleged unfair sales practices.
Minnesota and Safelite glass company in a battle over auto-glass repair practices
April 9, 2015 at 2:56AM
Safelite Group, based in Columbus, Ohio, claims Commerce Commissioner Michael Rothman is trying to drive the company out of Minnesota with regulatory decisions that ban the company from doing business with one and possibly more key insurers in the state.
But Rothman said his department's actions are consumer-driven and were prompted by complaints about Safelite's domination in the glass repair marketplace.
Earlier this week, Safelite filed a lawsuit in U.S. District Court seeking an injunction to stop enforcement of a cease-and-desist order signed by Auto Club Group, preventing the insurer from doing further business with Safelite. Auto Club is part of AAA, the auto travel giant.
Last month, the glass service firm also filed an appeal with the Minnesota Supreme Court regarding the Commerce Department ruling on the grounds that it was not allowed to present its side during enforcement action proceedings.
The Commerce Department order, dated Jan. 8, asserted that Safelite discouraged insured motorists from using its competitors through misleading statements about warranties, charges and availability of other providers.
An earlier appeal to the Minnesota Court of Appeals was dismissed in February in part because Auto Club "did not dispute the charges against it and consented to the proposed administrative action."
In recent court documents, Safelite said its First Amendment rights to free speech and 14th Amendment rights to due process are at stake.
"These rights have been violated because of actions taken by the government in favor of our competitors, based upon alleged complaints from some competitors," said Safelite Group President and CEO Tom Feeney in a statement provided to the Star Tribune.
"We are unaware of any consumer complaints about our business, which has been designed to provide a great experience for consumers, while fully complying with the law," Feeney added.
Safelite has 125 employees in Minnesota and provides repair services at 11 locations.
It describes itself as "the largest provider of vehicle glass repair services in Minnesota with its headquarters out of state."
Safelite also is used by insurance companies, including Auto Club, as a glass claims administrator, which means it handles the life cycle of a damaged glass claim, from taking the insured consumer's initial call to settling the claim.
"Our goal here simply is to protect consumers so that they are advised, as required under Minnesota's law, that they have a right to choose a car repair shop, and to prevent certain practices, such as telling people that they may not have a warranty or that they may have to pay more out of pocket when that is not true," Rothman said.
Commerce Department spokeswoman Libby Caulum said the department's investigation began "after we got complaints on behalf of consumers from other glass companies."
Chuck Lloyd, an attorney who represents smaller, independent glass companies, described the start-to-finish control over insurance claims by glass companies as "egregious."
"Consumers expect they are talking to a claims adjuster, but instead they're getting a sales pitch," Lloyd said.
Auto Club said it agreed to the Commerce Department consent order as being "in the best interests of all parties."
"The Auto Club Group takes seriously its commitment to protect the interests of our members and insureds as consumers and maintains the highest standards of ethics and service," said Gail Weinholzer, director of public affairs for AAA in Minnesota and Iowa.
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The Minnetonka-based health insurer says the new contract “ensures continued, uninterrupted network access” to hospitals and clinics at the Bloomington-based health system.
