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Senate Bill 2692

Senate Bill sb2692

CODING: Words stricken are deletions; words underlined are additions.
    Florida Senate - 2004                                  SB 2692

    By Senator Campbell





    32-1176-04

  1                      A bill to be entitled

  2         An act relating to motor vehicle repair;

  3         amending s. 559.901, F.S.; conforming a

  4         cross-reference to the Florida Motor Vehicle

  5         Repair Act; amending s. 559.903, F.S.; defining

  6         terms; amending s. 559.921, F.S.; providing a

  7         civil penalty for specified violations;

  8         creating s. 559.9222, F.S.; prohibiting

  9         insurers from owning or acquiring interests in

10         motor vehicle repair shops except under

11         specified circumstances; creating s. 559.9223,

12         F.S.; creating the presumption of a favored

13         facility agreement, as defined; creating s.

14         559.9224, F.S.; prescribing conditions for

15         contracts between insurers and certain motor

16         vehicle repair shops; creating s. 559.9225,

17         F.S.; requiring certain motor vehicle repair

18         shops to give notice to customers of

19         relationships with insurers; creating s.

20         559.9226, F.S.; prohibiting specified acts by

21         insurers with respect to motor vehicle repair;

22         creating s. 559.9227, F.S.; requiring contracts

23         between insurers and tied motor vehicle repair

24         shops to be negotiated as arm's length

25         transactions; creating s. 559.9228, F.S.;

26         prescribing permissible support services that

27         an insurer may provide to a tied motor vehicle

28         repair shop; creating s. 559.9229, F.S.;

29         providing for enforcement of antitrust laws;

30         providing an effective date.

31  

                                  1

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1  Be It Enacted by the Legislature of the State of Florida:

 2  

 3         Section 1.  Section 559.901, Florida Statutes, is

 4  amended to read:

 5         559.901  Short title.--Sections 559.901-559.9229

 6  559.901-559.9221 shall be known and may be cited as the

 7  "Florida Motor Vehicle Repair Act."

 8         Section 2.  Section 559.903, Florida Statutes, is

 9  amended to read:

10         559.903  Definitions.--As used in this act, the term:

11         (1)  "Customer" means the person who signs the written

12  repair estimate or any other person whom the person who signs

13  the written repair estimate designates on the written repair

14  estimate as a person who may authorize repair work.

15         (2)  "Department" means the Department of Agriculture

16  and Consumer Services.

17         (3)  "Employee" means an individual who is employed

18  full time or part time by a motor vehicle repair shop and

19  performs motor vehicle repair.

20         (4)  "Final estimate" means the last estimate approved

21  by the customer either in writing or orally, as evidenced by

22  the written repair estimate.

23         (5)  "Motor vehicle" means any automobile, truck, bus,

24  recreational vehicle, motorcycle, motor scooter, or other

25  motor powered vehicle, but does not include trailers, mobile

26  homes, travel trailers, trailer coaches without independent

27  motive power, watercraft or aircraft, or special mobile

28  equipment as defined in s. 316.003(48).

29         (6)  "Motor vehicle repair shop" means any person who,

30  for compensation, engages or attempts to engage in the repair

31  of motor vehicles owned by other persons and includes, but is

                                  2

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1  not limited to:  mobile motor vehicle repair shops, motor

 2  vehicle and recreational vehicle dealers; garages; service

 3  stations; self-employed individuals; truck stops; paint and

 4  body shops; brake, muffler, or transmission shops; and shops

 5  doing glass work.  Any person who engages solely in the

 6  maintenance or repair of the coach portion of a recreational

 7  vehicle is not a motor vehicle repair shop.

 8         (7)  "Place of business" means a physical place where

 9  the business of motor vehicle repair is conducted, including

10  any vehicle constituting a mobile motor vehicle repair shop

11  from which the business of motor vehicle repair is conducted.

12         (8)  "Motor vehicle repair" means all maintenance of

13  and modifications and repairs to motor vehicles, and

14  diagnostic work incident thereto, including, but not limited

15  to, the rebuilding or restoring of rebuilt vehicles, body

16  work, painting, warranty work, and other work customarily

17  undertaken by motor vehicle repair shops.

18         (9)  "Arm's length transaction" means a transaction

19  having a standard of conduct under which two parties having

20  substantially equal bargaining power, each acting in its own

21  interest, would negotiate or carry out a particular

22  transaction.

23         (10)  "Claims center" means a location designated by an

24  insurer where a claims adjuster, employee, or agent of the

25  insurer performs an initial damage estimate on a vehicle under

26  the terms of an insurance policy.

27         (11)  "Favored facility agreement" means an agreement

28  between an insurer and a motor vehicle repair shop under which

29  the insurer agrees to recommend, directly or indirectly, to

30  its policyholders or other beneficiaries under the insurer's

31  policies, that the policyholder or other beneficiary obtain

                                  3

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1  repairs at that motor vehicle repair shop or in any other way

 2  agrees to influence its policyholders or other beneficiaries

 3  under the insurer's policies to obtain repairs at that motor

 4  vehicle repair shop.

 5         (12)  "Insurer" means any person authorized under the

 6  Florida Insurance Code to transact insurance in this state.

 7         (13)  "Support services" means basic services, provided

 8  nonspecifically, which are provided internally and to each

 9  affiliate or subsidiary by an insurer, its parent company, or

10  a separate affiliate created to provide basic corporate

11  support. The term does not include a service related to the

12  operation of a motor vehicle repair shop if that service would

13  have no value or minimal value to any other type of business.

14         (14)  "Tied motor vehicle repair shop" means a motor

15  vehicle repair shop in which an insurer owns an interest.

16         Section 3.  Paragraph (b) of subsection (4), paragraph

17  (a) of subsection (5), and subsection (7) of section 559.921,

18  Florida Statutes, are amended to read:

19         559.921  Remedies.--

20         (4)

21         (b)  Upon a finding as set forth in paragraph (a), the

22  department may enter an order doing one or more of the

23  following:

24         1.  Issuing a notice of noncompliance pursuant to s.

25  120.695.

26         2.  Imposing an administrative fine not to exceed

27  $1,000 per violation for each act which constitutes a

28  violation of ss. 559.901-559.9221 this part or a rule or

29  order.

30         3.  Imposing an administrative fine of not less than

31  $1,000 or more than $5,000 for each act that constitutes a

                                  4

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1  violation of ss. 559.9222-559.9229. Each day during which a

 2  violation of ss. 559.9222-559.9229 occurs is a separate

 3  violation. The amount of the administrative fine shall be

 4  based on the seriousness of the violation and must reflect the

 5  following factors:

 6         a.  The nature, circumstances, extent, and gravity of

 7  the act or omission that constitutes the violation;

 8         b.  The economic harm caused by the violation;

 9         c.  The history of previous violations;

10         d.  The need to deter future violations by the person

11  charged with the violation;

12         e.  Efforts, if any, made to correct the violation; and

13         f.  Any other factors the court considers appropriate

14  to implement the remedial intent of this chapter.

15         4.3.  Directing that the motor vehicle repair shop

16  cease and desist specified activities.

17         5.4.  Refusing to register or revoking or suspending a

18  registration.

19         6.5.  Placing the registrant on probation for a period

20  of time, subject to such conditions as the department may

21  specify.

22         (5)(a)  The department or the state attorney, if a

23  violation of this part occurs in his or her judicial circuit,

24  shall be the enforcing authority for purposes of this part and

25  may bring a civil action in circuit court for temporary or

26  permanent injunctive relief and may seek other appropriate

27  civil relief, including a civil penalty not to exceed $1,000

28  for each violation of ss. 559.901-559.9221 and a civil penalty

29  of not less than $1,000 or more than $5,000 for a violation of

30  ss. 559.9222-559.9229, restitution and damages for injured

31  customers, court costs, and reasonable attorney's fees.

                                  5

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1         (7)  If, in any proceeding brought pursuant to ss.

 2  559.901-559.9221 this part, it is determined that the repairs

 3  and costs thereof were in fact authorized, orally or in

 4  writing, the repairs were completed in a proper manner, and

 5  the consumer benefited therefrom, then the enforcing authority

 6  may consider such factors in assessing penalties or damages

 7  and may award the reasonable value of such repairs.

 8         Section 4.  Section 559.9222, Florida Statutes, is

 9  created to read:

10         559.9222  Insurer interest; exclusively.--

11         (1)  Except as provided by this section, an insurer may

12  not own or acquire an interest in a motor vehicle repair shop.

13         (2)  An insurer that owns an interest in a tied motor

14  vehicle repair shop that was open for business, or on which

15  construction had commenced, on January 1, 2004, may maintain

16  that ownership interest and may operate that facility.

17         (3)  An insurer may relocate a tied motor vehicle

18  repair shop described by subsection (2) but may not obtain an

19  ownership interest in any additional facility not described by

20  subsection (2).

21         (4)  Subsections (2) and (3) are applicable to an

22  insurer only if the insurer and its tied motor vehicle repair

23  shop are otherwise in compliance with ss. 559.9222-559.9229.

24         (5)  Unless otherwise specifically provided by this

25  part, this part provides the exclusive authority and rules

26  applicable to the regulation of the relations between an

27  insurer and a tied motor vehicle repair shop.

28         Section 5.  Section 559.9223, Florida Statutes, is

29  created to read:

30  

31  

                                  6

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1         559.9223  Favored facility agreement presumed.--An

 2  insurer is presumed to have a favored facility agreement with

 3  a motor vehicle shop in which it owns an interest.

 4         Section 6.  Section 559.9224, Florida Statutes, is

 5  created to read:

 6         559.9224  Contractual conditions.--

 7         (1)  An insurer that owns an interest in a motor

 8  vehicle repair shop may use only one favored facility

 9  agreement.

10         (2)  Except as otherwise provided by this subsection,

11  the terms under which the insurer enters into a favored

12  facility agreement must be identical for all motor vehicle

13  repair shops, including a tied motor vehicle repair shop. An

14  insurer may vary the terms as necessary to implement technical

15  differences required by geographical factors or other

16  legitimate business factors.

17         (3)  Except as provided by subsection (4), an insurer

18  may not cancel a favored facility agreement until the

19  expiration of the 30th day after the date on which the insurer

20  provides notice to the motor vehicle repair shop of the

21  insurer's intent to cancel the agreement. The insure shall

22  include with the notice a statement explaining the reason for

23  the cancellation of the agreement.

24         (4)  An insurer may summarily cancel a favored facility

25  agreement with a motor vehicle repair shop if the insurer, a

26  policyholder of the insurer, or another beneficiary under the

27  insurer's policy establishes reasonable grounds to believe

28  that the motor vehicle repair shop is fraudulent in its

29  dealings with the insurer or the policyholder or other

30  beneficiaries under the insurer's policy.

31  

                                  7

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1         Section 7.  Section 559.9225, Florida Statutes, is

 2  created to read:

 3         559.9225  Notice.--

 4         (1)  An insurer that owns an interest in a motor

 5  vehicle repair shop shall post the following notice in each of

 6  its tied motor vehicle repair shops:

 7         "THIS MOTOR VEHICLE REPAIR SHOP IS OWNED IN

 8         WHOLE OR IN PART BY (insert name of insurer

 9         here). YOU ARE HEREBY NOTIFIED THAT YOU ARE

10         ENTITLED TO SEEK REPAIRS AT ANY MOTOR VEHICLE

11         REPAIR SHOP OF YOUR CHOICE."

12         (2)  The notice required by subsection (1) must be

13  posted prominently in a location in which it is likely to be

14  seen and read by a customer of the motor vehicle repair shop.

15         Section 8.  Section 559.9226, Florida Statutes, is

16  created to read:

17         559.9226  Prohibited acts.--An insurer may not:

18         (1)  Condition the provision of a product, service,

19  insurance policy renewal, pricing, or other benefit on the

20  purchase of any good or service from its tied motor vehicle

21  repair shops.

22         (2)  Share information with its tied motor vehicle

23  repair shops which is not made available on identical terms

24  and conditions to other motor vehicle repair shops with which

25  the insurer has entered into a favored facility agreement.

26         (3)  Engage in a joint marketing program with its tied

27  motor vehicle repair shops.

28         (4)  Provide its tied motor vehicle repair shops a

29  recommendation, referral, description, advantage, or access to

30  its policyholders or other beneficiaries under its insurance

31  policies which is not provided on identical terms to other

                                  8

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1  motor vehicle repair shops with which the insurer has entered

 2  into a favored facility agreement.

 3         (5)  Provide a tied motor vehicle repair shop access to

 4  the insurer's products or services on terms and conditions

 5  different from those under which the insurer provides access

 6  to the same products or services to another motor vehicle

 7  repair shop with which the insurer has entered into a favored

 8  facility agreement.

 9         (6)  Allow a tied motor vehicle repair shop to use the

10  insurer's name, trademark, tradename, brand, or logo in a

11  manner different than that allowed for any other motor vehicle

12  repair shop with which the insurer has entered into a favored

13  facility agreement.

14         (7)  Subsidize the business activities or operating

15  expenses of a tied motor vehicle repair shop.

16         (8)  Directly or indirectly require a policyholder of

17  the insurer or other beneficiary under the insurer's policy to

18  obtain a damage estimate on a vehicle covered by the insurance

19  policy at a tied motor vehicle repair shop.

20         (9)  Authorize or allow a person representing the

21  insurer, whether an employee or an independent contractor, to

22  recommend to a policyholder or other beneficiary under the

23  insurance policy that the policyholder or other beneficiary

24  obtain motor vehicle repair at a tied motor vehicle repair

25  shop, except to the same extent that the person recommends

26  other motor vehicle repair shops with which the insurer has

27  entered into a favored facility agreement.

28         (10)  Require a policyholder or beneficiary to use a

29  claims center located on the premises of a tied motor vehicle

30  repair shop.

31  

                                  9

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1         (11)  Enter into a favored facility agreement

 2  exclusively with its tied motor vehicle repair shops.

 3         (12)  Retaliate or discriminate against a person who:

 4         (a)  Files an action as provided by this part; or

 5         (b)  Assists or participates in any manner in an

 6  investigation, judicial proceeding, or other action brought or

 7  maintained as provided by this part.

 8         (13)  Include earnings or losses of a tied motor

 9  vehicle repair shop in a rate filing made under chapter 627.

10         Section 9.  Section 559.9227, Florida Statutes, is

11  created to read:

12         559.9227  Conflict of interest prohibited.--Except as

13  otherwise provided by this part, an agreement between an

14  insurer and its tied motor vehicle repair shop must be

15  negotiated and executed as an arm's length transaction.

16         Section 10.  Section 559.9228, Florida Statutes, is

17  created to read:

18         559.9228  Support services.--

19         (1) Notwithstanding this part, and except as provided

20  by subsection (2), an insurer may provide support services to

21  its tied motor vehicle repair shops if those services:

22         (a)  Are priced at a level that is fair and reasonable

23  to both the insurer and the tied motor vehicle repair shop;

24  and

25         (b)  Do not directly or indirectly confer a competitive

26  advantage to the tied motor vehicle repair shop.

27         (2)  Notwithstanding subsection (1), an agreement by an

28  insurer to provide support services to its tied motor vehicle

29  repair shop may not create the potential for confusion among

30  the policyholders of the insurer, other beneficiaries of an

31  insurance policy issued by the insurer, or other parties.

                                  10

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    Florida Senate - 2004                                  SB 2692
    32-1176-04




 1         Section 11.  Section 559.9229, Florida Statutes, is

 2  created to read:

 3         559.9229  Antitrust enforcement.--Sections

 4  559.9222-559.9229 do not confer immunity from an antitrust law

 5  of this state or the United States. A sanction or penalty

 6  imposed in an action brought under this part is in addition to

 7  other relief granted on the basis of the violation of an

 8  antitrust law of this state or the United States.

 9         Section 12.  This act shall take effect July 1, 2004.

10  

11            *****************************************

12                          SENATE SUMMARY

13    Provides conditions on the existence and nature of
      relationships between insurers and motor vehicle repair
14    shops in which they own an interest. Prohibits such
      interests except under limited conditions. Provides
15    penalties for violations and prohibits certain actions
      with respect thereto.
16  

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                                  11

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