The courtroom battle between Safelite and Diamond Triumph stepped up when Safelite received a federal judge’s permission to file new counterclaims against Diamond Triumph.
Safelite now alleges that Diamond Triumph illegally used “push payments” to induce insurance agents to steer customers to its doors.
“What Diamond Triumph is doing is illegal and an unfair business practice,” says Mark Smolik, Safelite’s senior vice president, general counsel and secretary.
Norm Harris, Diamond Triumph’s CEO, countered by saying, “I absolutely disagree with that, I disagree vehemently, and I think they are just deflecting interest away from their own bad behavior.”
Diamond Triumph’s original lawsuit, filed in March 2002, alleged that Safelite steered customers away from Diamond Triumph through misleading behavior by its call center operators.
The new counterclaim by Safelite says that Diamond Triumph used “commercial bribery,” such as gift cards, to influence insurance agents to urge their claimants to use Diamond Triumph’s auto glass repair services. Safelite has asked the court for an injunction against the “push payment” practice and also asked for damages and a statement that the payments were illegal. Judge James Munley of the U.S. District Court of the Middle District of Pennsylvania approved Safelite’s motion to file the claims as part of the Diamond Triumph Auto Glass Inc. vs. Safelite Glass Corp. lawsuit.
Smolik described a system where insurance agents, influenced by Diamond Triumph’s gifts, would call Safelite with a recommendation of a glass repair shop a claimant should contact for repairs. “We are not permitted to instruct that a repair option is limited by our contracts with insurance companies and by a number of states with anti-steering laws,” he says. “What Diamond Triumph is doing by steering people is illegal and improper.”
When asked about the legality of the practice, Harris says, “Soliciting business from insurance agents is nothing new.” He also adds, “Agent recommendation is a service to policy holders and it’s certainly nothing new—there have been salespeople trying to foster good relationships with vendors for years and years.”
Both sides believe the other’s arguments on the counterclaim are baseless. In a press release, Michael Sumsky, Diamond Triumph’s president and general counsel said, “Safelite’s new counterclaims do not have any merit. We believe this is another in a series of attempts by Safelite and its attorneys to distract the court and the public from the legitimate issues of our lawsuit—Safelite’s unlawful conduct and the damage it has caused Diamond Triumph.”
Smolik countered, saying “When the judge gave us permission to file there was an acknowledgement that the motion had validity.” He also added, “I see no merit to the allegations made by Diamond Triumph...”
Commenting on the original lawsuit Smolik says that Safelite could prove it did not steer claimants to certain shops through recordings that are made of all calls to Safelite customer service representatives. Harris supported Diamond Triumph’s case by saying that on a number of occasions a Diamond Triumph technician would arrive for a scheduled repair appointment only to find that a Safelite technician had already done the repair. Safelite says that administration is separated from the repair and installation business through a number of checks and balances such as requiring operators to stick to scripts and through recording and auditing calls, as well as by a “Chinese wall” dividing the operations.
