Crozat Gears Up for Fight

By Sheila Loftus

Reprinted with permission from Hammer and Dolly magazine, February 2006.

At last, the California Department of Insurance has listened to collision repair shop owner Gene Crozat.

For months, Crozat has been writing to the Department of Insurance, complaining about GEICO steering work from his Santa Rosa, Calif., facility. Crozat reiterated his complaints in front of the California Senate's Banking, Finance and Insurance Committee on November 21, 2005 (January 2006).

Thanks to pressure from the committee's chair, Senator Jackie Speier, the Department of Insurance has ordered GEICO to appear at a hearing in March in which it will be asked to answer Crozat's numerous allegations.

In calling for the hearing, the Department of Insurance listed 12 cases in which motorists have complained about GEICO being unwilling to pay for repairs at the repair facilities they selected. In most cases, the motorists' preferred facility had a higher labor rate than GEICO was willing to pay. GEICO, however, wouldn't have been able to say what was a reasonable and customary labor rate in the area, the Department of Insurance said, because it either hadn't conducted a rate survey or hadn't filed it with the Department of Insurance.

The case of Scott Sheldon is typical. In December 2004, Sheldon filed a first-party claim with GEICO for damage to his vehicle. The labor rate at the shop Sheldon had selected was $86 an hour; GEICO was only willing to pay $75 an hour, based on "the belief that the shop's rate exceed[ed] the generally accepted labor rates for the area."

GEICO, however, "had not conducted a labor rate survey to determine the prevailing labor rate in the area, nor provided any other evidence or support that its adjustment of the repair facility's estimate was reasonable," said the Department's charging document.

In his testimony in front of the Senate committee, Crozat said some insurers use the threat of a shop's "high" labor rate as a form of steering. By telling consumers they won't pay it and that they, the consumers, will have to make up the difference, consumers feel compelled to take their vehicle elsewhere.

On 250 occasions, Crozat's customers have gone to small claims court to compel insurers to pay Crozat's labor rate, Crozat said. In only 16 of the cases have the customers lost. "An awful lot of judges have said 'The bill is fair and reasonable. The method of repair is fair and reasonable. You cannot fix labor rates,'" Crozat said.

During the hearing, Speier called Crozat a "hero."

For his part, Crozat said he is going to sue GEICO. "I'm going to take that lizard to court," he said. "I don't think he will have a tail when I get done with him."

Even Matthew Blake, who said that his collision repair facility has benefited from the work directed to it at Crozat's expense, testified in favor of a fair labor rate. Blake said that he is having a difficult time making money on what GEICO and other insurers are willing to pay for repairs.

Both Speier and John Garamendi, the California insurance commissioner, are running for California lieutenant governor. They had several tense exchanges at the hearing.

Reprinted with permission from Hammer and Dolly magazine, February 2006.