Can Insurers Sue Glass Shops? Florida Supreme Court to Decide

A panel of judges in the U.S. 11th Circuit Court of Appeals tossed the question of whether insurance companies may sue auto glass shops under Florida’s Motor Vehicle Repair Act up to the Florida Supreme Court.

The case builds on four years of lower court wrangling between Glassco Auto Glass in Kissimmee, Fla., and insurance giant GEICO. Florida state courts ultimately sided with the auto glass company, which prompted GEICO to file suit in federal court against Glassco, alleging that the auto glass shop violated the state’s Motor Vehicle Repair Act and committed fraud in its billing practices.

In the original lawsuit against GEICO, Glassco disputed the insurance company’s practice of deeply discounting invoice payments based on the National Auto Glass Specifications’ (NAGS) “prevailing competitive price” for auto glass repairs. The court used the term “repairs” in place of windshield repair and/or replacement. In 2002, the insurance company notified repair shops that it would only reimburse a deeply discounted amount of the NAGS’ pricing standards.

From 2016 to 2019, Glassco repaired or replaced 1,773 windshields and filed claims with GEICO, but the insurer only paid a deeply discounted portion of the invoice,” according to the court.

“In response, Glassco filed small claims actions in Florida state court to collect the difference between its invoiced prices and the discounted amounts GEICO paid,” the Appeals Court said. “In state small claims court, 11 of the 1,773 cases were consolidated, tried, and resulted in a final judgment for Glassco’s invoiced prices against GEICO.”

The Florida small claims court determined that GEICO paid auto glass shops less than the NAGS prevailing competitive price for auto glass work The case eventually landed before the Florida Supreme Court, which agreed with the lower court’s ruling.

Meanwhile, GEICO sued in federal court to recover more than $700,000 that it paid to Glassco, alleging that Glassco’s billing practices violated the state’s repair act and accusing the company of committing fraud. A district court had held that GEICO is not a customer as defined under state law and, therefore, could not claim protections provided under the law.

“The questions presented are sufficiently unsettled, important, and likely to recur that we believe the best course is to certify them to the Supreme Court of Florida, the final arbiter of Florida law,” wrote the three-judge appeals panel on wrote Nov. 7.

The federal judges sent the case back to the Florida Supreme Court asking two questions:

• Does [the Florida Motor Vehicle Act] grant an insurance company a cause of action when a repair shop does not provide any written repair estimate?
• Do the violations under the repair act void a repair invoice for completed windshield repairs and preclude a repair shop from being paid any of its invoiced amounts by an insurance company?

“GEICO also argues that a strict application of the definition of ‘customer’ creates a hole in the Repair Act. Because defendants never provided anyone with the requisite written estimate, no one was able to sign an estimate, and therefore, no one could ever bring a private action against defendants under [Florida law],” the Appeals Court said. “GEICO contends that the district court’s narrow construction of ‘customer’ insulates repair shops from liability for their own Repair Act violations.”

Glassco contends that the law does not provide recovery, restitution, or money back when GEICO directly pays its customers’ assigned benefits to a non-compliant repair shop. The court said that under Florida law, insurance companies cannot require a person with comprehensive coverage to pay a deductible for windshield repairs. The insured can select the repair shop at “no cost” to them.

“The remedial nature of the Repair Act—to protect consumer customers from oral estimates and misunderstandings—is arguably not designed to protect insurers, such as GEICO,” the court said.

Read the judges’ opinion HERE.

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