How to avoid fraudulent warranty reimbursement – Attorney Len Bellavia

How to avoid fraudulent warranty reimbursement – Attorney Len Bellavia

For years, dealers have been challenged with receiving fair compensation for retail warranty reimbursement. However, nowadays, franchised dealers in all states are protected. On today’s CBT Now, Lenord Bellavia, Founding Partner of Bellavia Blatt,  joins us to break down what this means for the industry.

According to Bellavia, “Dealers should pay attention to the reimbursement rates as it correlates to revenue streams.” But, dealers are front-end centric, meaning they always worry about sales. Therefore, based on how the industry continues to evolve, the fixed operations sector has driven the entire business overhead expeensives. Bellavia says, “This is what dealers call shop absorption, where the back end of the business drives the overhead.” Furthermore, Bellavia believes “Dealers get grossly underpaid for their parts and labor under warranty.”

Reasonable compensation

When sitting down with dealers to outline what they’re leaving on the table, most dealers believe they’re missing out on a few couple of dollars or percentages in labor rates. However, Bellavia asserts, “When translated into real dollars, it’s typically between $200,000 and $300,000 annually in revenue opportunities. However, manufacturers hold dealers to rigorous standards regarding supporting updates and working capital. According to Bellavia, manufacturers set up departments at the OEM level to analyze warranty claims to receive kickbacks, but “Those submissions must be strictly focused on.” He continues, “If dealers submit 100 consecutive repair orders and one isn’t appropriate for the batch, the OEM will reject it and postpone it by a month or two. Which leads to possible lost revenue of several thousand dollars.”

To properly create a submission, Bellavia’s highly skilled team takes 30 to 40 hours in the first step. Then, they have a quality control process that takes an additional ten hours to review possible mistakes that the manufacturers could see. Furthermore, according to Bellavia, “There are state statute exclusions that dealers are unaware of, which include batteries, maintenance, tires, and more that reduce the overall markup.”

All 50 states have legislation defining 150 qualifying repair orders, parts, and labor. Most dealers are aware of the legislation and are taking advantage of it. Still, those unaware of it need to learn they can resubmit a submission repeatedly for labor because retail labor increases annually.

Antitrust Suit Against CDK Global Advances

Antitrust Suit Against CDK Global Advances

We are pleased to report we have won a substantial victory allowing our national putative dealer class action case against CDK Global to proceed to trial. A federal judge allowed the dealer class action lawsuit to proceed against CDK Global alleging, the dealership management system giant colluded with a rival to reduce competition and boost prices for dealers.

A separate but related decision also dismissed CDK’s counterclaims, granting motion for summary judgement. Both decisions set the stage for the case to go to trial after a multiyear process.

See the article from the July 31st Automotive News by clicking below:

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Overcoming Manufacturer Efforts To Defeat Dealer Requests For Retail Reimbursement

Overcoming Manufacturer Efforts To Defeat Dealer Requests For Retail Reimbursement

Retail Warranty Reimbursement statutes have been passed by state legislatures in all fifty (50) states to protect the more than 17,000 franchised new car dealers in this country and to enforce their rights with respect to reimbursement at retail rates. Of course each state has its own unique considerations and state-specific provisions: however, the general intent and objectives of the statutes are to ensure fair and reasonable compensation for dealers for their parts and labor warranty claims. See e.g., NY CLS Veh &Tr § 465, Mass. Ann. Laws Ch. 93B § 9, Ky Rev. Stat. § 190.046, Nev. Rev. Stat. Ann. § 482.36385, A.R.S. § 28-4451.

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Leonard Bellavia, Esq. on CBT Automotive Network

How Car Dealers Can Structure Their Buy/Sell Deals for Maximum Success — Len Bellavia, Esq.

We know there are plenty of dealership buyers right now, and as we are all aware, it is a seller’s market. Brokers are constantly making inquiries and telling car dealers that they will never be able to get a better price than they can get right now. Today on Inside Automotive, we’re pleased to welcome back Len Bellavia, Esq., Founding Partner of the law firm of Bellavia Blatt PC, also known as, who has handled hundreds of dealership buy-sells. Bellavia joins us to share his creative ways of dealing with this topic, which has been on the minds of many dealers lately. Many dealership buyers in the market are private equity groups, family offices, and public companies with bottomless pockets. Every time one of these organizations buys a dealer group, they have to staff it. But with the current staffing challenges, it isn’t easy to find qualified operators. Sellers don’t always stay on after the transaction to consult. In fact, Bellavia believes the buy/sell market is at a “crossroads” because it’s tougher to convince sellers that the value of their dealerships is not the same as it was a year or two ago. There’s a “widening gap” between what buyers are willing to pay and what sellers expect. If you compound that problem with current economic conditions and OEM news, buyers are doing more sophisticated analyses of potential transactions. On the flip side, sellers are experiencing record profitability, and they are tempted to stay on the fence. However, sellers need to have a succession plan in place, says Bellavia. Because blue sky values are so high, qualified general managers are largely getting priced out of the market. They are no longer able to come to the table because dealer principals are paying closer attention to the “big money players.” But if the dealer principal isn’t quite ready to leave the business, the best course of action is to cultivate a young, talented manager and allow them to buy a piece of the dealership. 

IADA Exclusively Endorses Bellavia Blatt, P.C. as Provider of Retail Warranty Reimbursement Services

Bellavia Blatt, P.C. is pleased to announce that we have been selected by the IADA as the Association’s exclusively endorsed provider of Retail Warranty Reimbursement services. Bellavia Blatt is widely recognized as the pioneer and expert in retail warranty reimbursement submissions and has represented thousands of dealers in obtaining retail rates for warranty parts and labor.

Bellavia Blatt consists of a team of dedicated legal staff and dealership fixed operations specialists who solely focus on these matters. We also provide all clients, at no additional cost, various fixed operations consulting services as it relates to retail warranty pricing issues. Our solution is turnkey. Bellavia Blatt’s staff does all of the work behind the scenes so your manufacturer will not know that you retained us. Simply stated, Bellavia Blatt’s retail warranty reimbursement services are “best in class”, the most cost-effective and provide the greatest value in the industry.

The new warranty reimbursement provisions in the Illinois Motor Vehicle Franchise Act enable dealers to significantly increase their warranty compensation for parts and labor. These provisions went into effect on January 1st, 2022, and it is in your dealership’s best interest to start the submission process immediately.

For more information, please contact Managing Attorney, Keith Gitman at (516) 873-3000 or via email at Bellavia Blatt looks forward to assisting your dealership receive the highest warranty reimbursement compensation at retail rates.

Leonard Bellavia Has Been Selected to be the Recipient of the Long Island Business News 2020 Leadership in Law Award

Leonard A. Bellavia

Leonard Bellavia Has Been Selected to be the Recipient of the Long Island Business News 2020 Leadership in Law Award

Bellavia Blatt Founder and Managing Partner, Leonard Bellavia Esq., has been selected to be the recipient of the Long Island Business News ‘Leadership in Law’ award. Jenna Natale of Long Island Business News stated: “The Leadership in Law Awards is dedicated to those whose leadership, both in the legal profession and in the community, has had a positive impact on Long Island. Honorees demonstrate outstanding achievements, excellence in professionalism, and support of the Long Island community.”

With over 33 years of experience, Leonard Bellavia is a nationally recognized authority in the field of automotive franchise law. Leonard represents thousands of automobile dealerships across the country in all aspects of commercial litigation and buy-sell transactions and has been instrumental in negotiating the sales of hundreds of dealerships. He has achieved national recognition for advocating the mass action litigation model on behalf of franchised automobile dealers.

Leonard has also been actively involved in giving back to the community through various charitable endeavors. He has been recognized for his leadership and humanitarian work not only by his colleagues but also the community. He has had the honor of being the recipient of the Annual Harry Chapin Humanitarian Award for providing free legal work to indigent Long Islanders and has also spearheaded two charitable foundations; both of which are very personal to him. “Lawyers v. Cancer” and “Dealers v. Cancer” which are nationwide charitable organization that raise funds for the Prostate Cancer Foundation (PCF). This national fundraising initiative is centered around an annual classic car show produced by Leonard entitled “Cruisin’ For The Cure”.

The first show, held in 2017 at Windham Mountain in upstate New York, featured about 300 classic and 50 new exotic cars. They were so successful, the PCF invited him to an event where he met a Nobel Prize-winning scientist who pioneered immunotherapy, funded in part by his show’s earnings. Leonard has led philanthropic movements within the Long Island community, as well as nationwide, and his efforts and leadership initiatives are commendable.

The Long Island Business News ‘Leadership in Law’ 2020 Virtual Awards Program will take place November 19, 2020 at 10:30am EST.