The New Year probably didn’t start the way Safelite officials expected.
On Jan. 5, Safelite Group Inc., Safelite AutoGlass (SAG) and Safelite Solutions LLC (SSL) were sued for insurance fraud by a former employee for himself and on behalf of the people of California.
Former SAG product development and strategy manager Brian Williams alleges the company billed insurers for OEM or aftermarket moldings* but used neither, instead using less expensive universal moldings rather than part-specific ones.
The Alleged Fraud
“Given Safelite’s knowledge that its technicians use universal moldings instead of part-specific moldings, but the insurance companies’ requirement that replacement parts either be OEM or aftermarket parts, Safelite concocted a scheme to get paid insurance rates still regardless of the part selected by its technicians,” says the complaint filed in Superior Court of the State of California. It further cites two senior employees as having created and implemented computer programming that would do just that.
“Safelite’s computer systems have been programmed to replace the name of the OEM or aftermarket part with … Fleximold while keeping the part specific number and/or part specific price of the OEM or aftermarket part intact,” says the complaint. “Insurance companies do not know they are being defrauded because Safelite intentionally programmed its billing system to hide the information.”
“Because Safelite Solutions is also a third-party administrator for the insurance companies and itself regularly investigates and prosecutes claims of insurance fraud, insurance companies trust Safelite and would have no reason to believe that Safelite itself perpetuates insurance fraud. Indeed, while Safelite Solutions claims that it will prevent scams and fraud, Safelite Solutions has turned a blind eye and … has maintained fraudulent activities,” the court documents say.
The complaint provides three examples of invoices, complete with computer screen captures, in which such substitutions occurred. It alleges Safelite was usually paid what it billed for moldings by insurers, except for GEICO invoices up through 2020, during which a contract giving the insurer “substantial discounts on parts” was in place.
Williams says SSL billing manager Denise Shoopman also told him they did not bill universal moldings to State Farm Insurance, as their third-party administrator requires proof of purchase.
“Many times, I believe we just select another less expensive molding that we know we can get paid on,” Shoopman allegedly told Williams.
How It Was Discovered
Williams says he first noticed differences between the amounts of universal moldings purchased and the amount sold in the summer of 2019. He says Safelite had billed approximately half the amount of universal moldings it had purchased and had billed for more OEM and aftermarket moldings than it had bought.
Williams continued his investigation, accessing audit logs and other data until he brought it to his direct supervisor, SAG chief operating officer Steve Miggo.
“Mr. Miggo,” says the complaint, “seemed concerned and indicated that it was ‘disturbing’ that this was happening. Mr. Miggo asked Williams to ‘stop digging’ until the ‘appropriate’ people were contacted.”
Williams subsequently briefed Jon Cardi, senior vice president of strategic client services and support at Safelite Solutions, on his findings.
Upon hearing about the research, Mr. Cardi became “visibly upset,” says the complaint, and agreed that Williams should complete his investigation. The complaint says Cardi indicated that the company would not provide any compensation for their years of overbilling, stating, ‘We aren’t going backwards.'”
Williams says he was then tasked with attempting to fix the overbilling scheme.
In a move he believes was related to his investigation, Williams was furloughed without pay by Safelite for four months beginning in March 2020. He later discovered he was the only management person in the supply chain furloughed.
When he returned to work in July 2020, Williams was told that his job duties were changing and that he no longer reported to Miggo but to Dino Lanno, then the vice president of supply chain.
According to the complaint, Williams asked about the billing issues. Lanno informed him that he and [assistant vice president] Groves had “put that in place years ago, and it is fine as is,” says the complaint. It also alleges that Lanno threatened Williams, saying his career would “end up in a ditch.”
Williams alleges that when he tried again to discuss the billing issue and other projects, “Mr. Lanno became agitated and rambled on about the fact that the ‘FBI’ would get involved and that it would only become a huge problem for Safelite.” Williams said Lanno told him on July 15 that Lanno had met with Miggo, chief financial officer Tim Spencer, and Cardi, and they had decided the billing project was not a priority and he should stop working on it.
Lanno asked Williams to send a note to everyone involved saying Williams had decided to stop working on the project. Williams refused.
The Move Up Safelite–and Belron
In the complaint, Williams recounts how, in a meeting in late August 2020, Lanno gave him two choices for his future at Safelite. One was to work on a team with which he did not enjoy a good relationship; the other was to apply for a role at Belron, Safelite’s parent. He chose the job with Belron as he had young children at home and felt the first option was essentially a demotion.
When he met with Miggo to discuss the transition and the billing project, Miggo agreed that he should continue to work on its resolution, as did his new manager, Rolando Herrera.
Working on and resolving the issue proved to be two very different things for Williams. “Many of the people who were on the team were Mr. Lanno’s subordinates. Thus, as more people were added, the project became difficult to manage as the team brought up roadblock after roadblock,” says the complaint. He “was unable to cause any changes to the billing practice.”
Williams went to Safelite chief executive officer Tom Feeney about the issue on April 22, 2021, and met with him several times that day. He was told that a group led by Safelite vice president and controller Kathy Paskvan would fix the issue. The group worked on the issue for approximately two months, but according to Williams, “there was no mention of notifying past customers or paying anything back …”
He then brought his concerns to Belron management, which began an internal investigation.
In November 2021, Johnny Vorce, Belron’s global head of risk, asked Williams to fly to Orlando on short notice for a meeting that included Belron’s outside counsel.
“Shortly following that meeting, it became clear … that defendants had little interest in actually stopping the schemes.” Williams resigned from Belron in mid-December 2021.
Wiping the Wipes Clean
Williams alleges a second program by Safelite to gain payment for services it did not provide. He says the company implemented a Care and Clean Service (ECTC) in which the technician uses special sanitation wipes to clean the vehicle before beginning a job and before returning the vehicle to the customer. Safelite sold the service, which required the use of at least four disinfecting wipes on each vehicle, to its insurance clients. It charged them $30 for the service.
Williams’ complaint says that just under 500,000 wipes should have been used in California during the four months the program was operational, yet only 25,320 were. The ECTC program generated $70 million for Safelite nationally.
“Even though Safelite’s technicians did not sanitize the vehicles either before or after a job for the majority of vehicles at issue, Safelite nonetheless billed insurance companies for the ECTC Service,” alleges the court filing.
What Is at Stake?
California law allows civil penalties of up to $10,000 for every fraudulent act. The lawsuit asks for that, plus a monetary punishment that removes any unlawful profit from the company and provides restitution. It further asks for treble that amount, pre-and post-judgment interest, attorney’s fees, costs and expenses.
It asks for the maximum recovery possible for Williams.
At the time of publication, a response from Safelite was not available in the court system.
* The word “moulding” is usually used to denote such items in the auto glass industry. Since the court papers filed use the spelling ” molding,” this article has followed that convention.