PETITION OF:

SECTION 1. Section 1. This Act may be cited as “The Truth in Pricing for Auto Glass Insurance Coverage Act.”

Section 2. The Commissioner of the Division of Insurance shall set safety standards and regulations for the installation of auto glass in the commonwealth by September 30, 2009. Such standards and regulations shall be set under the following guidelines:

a) An Auto Glass Safety Standards Committee shall be empanelled to set the safety standards and regulations for the installation of auto glass in the commonwealth;

b) Such committee shall consist of three representatives of the auto insurance industry appointed by the Automobile Insurers’ Bureau (AIB), three representatives of the auto glass industry appointed by the Massachusetts Glass Dealers Association (MGDA), and the Insurance Commissioner or a permanent designee of the commissioner, with such designee serving as chairperson of the committee;

c) A permanent designated person employed by the commonwealth’s Division of Standards, which issues licenses under Chapter 100A to auto glass service companies to accept payments from insurance carriers, may serve as a non-voting member of the committee;

d) All committee members and liaisons shall serve on a voluntary basis, and shall not receive any payments of any kind and from any companies or organizations, not including normal and customary salaries, wages, or compensations, directly for serving on the committee;

e) The committee shall meet at the offices of the Division of Insurance no less than six times between the date of enactment of this Act and September 30, 2009, the date upon which the safety standards and regulations must be set;

f) The committee shall consider information published and expert testimony from, but not limited to, the Insurance Institute for Highway Safety (IIHS), the National Highway Traffic Safety Administration (NHTSA), the Glazing Committee of the Society of Automotive Engineers (SAE), and the Auto Glass Replacement Safety Standard Council (AGRSS), as well as any other person, organization, or entity that possesses credible information pertinent to the committee in order to set safety standards and regulations. All information must be evaluated with regard to compliance with all pertinent Federal Motor Vehicle Safety Standards in effect at the time, most specifically FMVSS 205, FMVSS 212, FMVSS 216, and FMVSS 219;

g) Upon the issuance of safety standards and the promulgation of the regulations, after the appropriate hearing process required by statute for the Division of Insurance, the committee shall continue to meet annually, after proper notice is distributed to interested parties, to evaluate the performance and implementation of such standards and regulations, hear testimony from witnesses, and recommend updates to the regulations to the Insurance Commissioner.

Section 3. All manufacturers and/or fabricators of standardized auto glass parts who make available products for sale in the Commonwealth of Massachusetts, either directly or through wholesale and/or retail establishments, must publish a list of all products available with a “Manufacturer’s Suggested Retail Price (MSRP).” Such lists shall be made available, either in printed or electronic form, to all wholesale and retail establishments, insurance carriers, and/or third-party billers. Such price lists shall be made available in complete form not later than 180 days after the enactment of this Act, and shall be periodically updated at the sole discretion of each such manufacturer and/or fabricator.

Section 4. Cost Containment Utilizing a Single Discount Plan

To contain costs, insurance carriers shall establish its lowest possible cost by utilizing a single discount pricing plan that it requests from glass service providers. All glass service providers registered to accept insurance payments from carriers under Chapter 100A of the commonwealth are eligible to notify any such carrier that their auto glass loss claims will be fulfilled according to that plan, without exception. No other pricing plan, scheme, or manipulation of such plan, can be negotiated and/or agreed to by any insurance carrier with any glass service company, “preferred list” of glass service companies, or cartel of glass service companies exclusively, without the same opportunity for direct negotiation or agreement at that same revised pricing plan being offered to all glass service companies registered under Chapter 100A.

Section 5. Setting of Prices.

No insurance carrier may seek or accept assistance in any way by any company that serves as its third-party biller, in the setting of the prices it will pay to auto glass service companies. Such prohibited assistance shall include, but not be limited to, technical assistance, pricing information of other insurance carriers, both domestic and non-domestic, and pricing methodologies of other insurance carriers, both domestic and non-domestic. In the act of setting prices, insurers must act on their own, as third-party billers possess no exemptions from Federal law or statutes, or the laws of the Commonwealth of Massachusetts, as do insurers, in certain cases. Thus, any such assistance in the setting of prices shall be deemed and unfair trade practice.

Section 6. Tie-In Arrangements.

Any third-party biller or any other party or company who is responsible for payments and/or processing auto glass damage or loss claims for any insurance carrier shall be compensated, at a fair and customary rate, specifically for the administration of such claims, and such compensation shall not be construed to subsidize or act as an inducement for the offering of product, labor, and/or service discounts to any insurance carrier by an auto glass service company related to the business entity of a third-party biller, by stock ownership, or ownership by a direct family member, or a cartel of auto glass service companies. In recognition of the monies paid to third-party billers in the form of commission, brokerage fees, or other compensation for processing claims, such actions shall be prohibited by this Act and may be considered a form of tie-in arrangement, which may be a violation of Federal law and the laws of the Commonwealth of Massachusetts. Prohibition and oversight of these actions shall be the sole responsibility of any insurance carrier.

Section 7. “Incident Pricing”

The business entity of any third-party biller that is related to the business entity of any glass service company, either by stock ownership or by ownership of a direct family relative, shall not engage in the practice or offer to any insurance carrier a business arrangement known as “incident pricing.” This combination of related business entities is afforded the potential ability to 1) receive payment from an insurance carrier to process the claim, which, if combined with the setting of any price of good and/or services for sale, which actions may violate Federal law, 2) direct, through telephonic links, any auto glass damage or loss claimant to its related glass service company, 3) allocate specific claims based on cost or degree of difficulty, directing easier, less costly claims to its related glass service company and directing difficult, more costly claims to glass service companies with which it competes, and such a practice may be known as “price discrimination,” which actions may violate Federal law, and 4) facilitate the “stealing” of glass service jobs because the third-party biller knows the time and location of jobs scheduled with other glass service companies and can easily dispatch that information to its related glass service company. This combination of related business entities must be prohibited from co-mingling these exclusionary economic benefits to offer to fix a single price for any and all auto glass claims regardless of severity, or “incident price,” for all auto glass claims that it, alone, can segment to the exclusion of all other competitors, can cause the effect of suppressing competition by its offer. Further, such offer of an “incident price” can be construed to be a transfer of risk of insurability that must be borne by the insurance carrier alone, to an entity that is not licensed to offer policies of insurance in the Commonwealth of Massachusetts. Prohibition and oversight of this action shall be the sole responsibility of any insurance carrier, which shall not accept such offer upon enactment of this Act.

Section 8. Prohibition of “Gap” Billing by Cartels and Third-Party Billers.

Not later than thirty days after the enactment of this Act, no auto glass service company, cartel of auto glass service companies, or any third-party biller shall add any surcharge to, or deduct any special charge from, the price of the single discount plan of the insurance carrier, and bill for such surcharge or impose such deduction, to or from the proceeds forwarded to any glass service company registered under Chapter 100A of the commonwealth. This extraneous added cost to the auto insurance premiums paid by consumers in the commonwealth, known as “gap” billing, shall be strictly prohibited by this Act. In order to eliminate “gap” billing, each insurance carrier shall:

a) modify all agreements with any auto glass service company, cartel of auto glass service companies, or third-party billers to include a declarative statement that such entity shall not add any surcharges or impose any deduction from proceeds to any glass service company, registered under Chapter 100A, in the settlement of auto glass damage or loss claims in the Commonwealth of Massachusetts, in accordance with the provisions of this Act;

b) circulate on the same day, using either postal mail, electronic mail, facsimile, or other means of efficient communication, a clear, detailed notice delineating its single discount plan, referred to in Section 5 of this Act, to all glass service companies registered under Chapter 100A of this commonwealth. Such notice shall be circulated directly by each insurance carrier, and shall not be circulated by and/or from the office of any third-party biller, or any other party or company;

c) such notice shall include an agreement to be completed by any auto glass service company to comply with the provisions of the insurance carrier’s single discount plan and a date by which the agreement must be signed and returned, such date being at least fifteen days from the date of notice;

d) such agreements must be returned to the designated Massachusetts office, required by regulations of the Division of Insurance, of the insurance carrier, and shall not be required to be returned to any office maintained by any third-party biller or any other party or company;

e) conduct an internal audit of claims payments, known as a “closed-claim audit,” of its own offices and/or of any third-party biller or any other party or company who is responsible for payments and/or processing of auto glass damage and loss claims;

f) such closed-claim audit shall include an adequate representative sampling of claims to either reveal any “gap” pricing discrepancies prohibited under this section, or to validate that the insurance carrier paid glass service companies according to the provisions of its single discount plan;

g) such closed-claim audit shall be conducted at least once per year and any patterns of irregularities shall be reported forthwith to the Insurance Commissioner.

Section 9. Specification and Use of Lower-Cost Auto Glass Parts.

In the event that an insurance carrier and/or a third-party biller knows of a credible, reliable, and local source of an available auto glass part which shall materially lower the cost of that part to the insurance carrier, and such lower-cost part is compliant with the nationally-recognized AGRSS standard, referred to in Section 2(f) above, then insurance carrier and/or third-party biller may specify that lower-cost part be used before authorizing a claim number to the glass service company. No insurance carrier and/or third-party biller shall restrict payment or deduct any amount in the settlement of the claim, unless the sales price of the glass part, and the related discount rate for the part, if applicable, is agreed to by the auto glass service company and the third-party biller or the insurance carrier at the time, and not later than the time, of the issuance of a claim or reference number for the claim. If such a part is specified, third-party biller and/or insurance carrier must agree to pay for any additional fees and surcharges which may apply to the purchase of such a part by the auto glass company.

Section 10. Insurance Carrier and/or Insurance Agent Shop Ownership

Any insurance carrier, insurance agent, or any company or entity related to an insurance carrier or agent shall be prohibited from operating an auto glass service company that is registered under Chapter 100A of the Commonwealth of Massachusetts.

Section 11. Penalties.

a) Any manufacturer and/or fabricator of standardized auto glass parts who offers such products for sale in the Commonwealth of Massachusetts shall comply with Section 3 of this Act. Failure to comply by the date specified in Section 4 of this Act shall be deemed a violation of this Act and be punishable by a fine of $5,000.00, imposed by the Office of the Attorney General. Repeated failure to comply with the provisions of Section 4 of this Act shall be punishable by an additional fine of $5,000.00, for every period of sixty days of non-compliance thereafter, imposed by the Office of the Attorney General.

b) Any auto insurance carrier who does not comply with the provisions of Section 4, above, shall be deemed in violation of this Act. Any violation of Section 4 of this Act shall be punishable by a fine of $5,000.00, imposed by the Office of the Attorney General. Repeated violations of Section 4 shall be punishable by an additional fine of $5,000.00, for every period of sixty days of non-compliance thereafter, imposed by the Office of the Attorney General.

c) Any insurance carrier who does not comply with Section 5 of this Act shall be subject to a fine of not less than $5,000.00, imposed by the Office of the Attorney General.

d) Any insurance carrier who accepts and agrees to an offer of an “incident price,” as set forth in Section 8 of this Act, shall be deemed in violation of such Section 7, which shall be punishable by a fine of not less than $10,000.00, imposed by the Office of the Attorney General.

e) Any glass service company, cartel of glass service companies, and/or third-party billers shall be subject to a fine of not less than $1,000.00 for each claim that contains any charges or deductions considered in violation of Section 8 of this Act. Any auto insurance carrier that does not comply with the provisions set forth in Section 8(a), (b), (c), (d), (e), (f), and/or (g), of this Act, shall be subject to a fine of not less than $300.00 for each violation. All such fines included in this Section 11(d) shall be imposed by the Office of the Attorney General.

f) Any auto insurance carrier or third-party biller shall be subject to a fine of not less than $300.00 for actions deemed in violation of Section 9 of this Act. Such fines included in this Section 11(e) shall be imposed by the Office of the Attorney General.