Maryland Retail Warranty Reimbursement Law

§ 15-212. Refusal, suspension, or revocation of manufacturer or distributor license

(a) [“motor home” defined]

(b) In addition to the other grounds specified in Subtitle 1 of this title for refusal, suspension, or revocation of a license, the Administration may refuse to grant a license under this subtitle to any person and may suspend, revoke, or refuse to renew the license of any person if it finds that the person has:

(1) Made any material misrepresentation in transferring a vehicle or truck component part to a dealer or distributor;

(2) Failed to comply with any written warranty agreement; or

(3) Failed to reasonably compensate any franchised dealer who does work under:

(i) The vehicle preparation and delivery obligations of the dealer; or

(ii) Any outstanding express or implied new vehicle or truck component parts warranty.

(c)(1) A licensee shall specify in writing to each of its motor vehicle dealers licensed in the State:

(i) The dealer’s obligation for vehicle preparation, delivery, warranties, and recalls on its products;

(ii) The schedule of compensation to be paid to the dealers for parts, including parts assemblies, and labor, including diagnostic labor and associated administrative requirements, in connection with the service obligations established under item (i) of this paragraph; and

(iii) A time allowance for the performance of labor described in this paragraph that is reasonable and adequate.

(2) Reasonable compensation under this section may not be less than:

(i) With respect to labor for warranty or recall repairs, the dealer’s current labor rate for nonwarranty repairs of a like kind for retail customers; and

(ii) With respect to any part, the dealer’s cost plus its current retail mark-up percentage charged to retail customers for nonwarranty repairs of a like kind.

(3)(i) For purposes of paragraph (2) of this subsection, the dealer’s labor rate or parts mark-up percentage shall be established by a submission to the licensee of whichever of the following produces fewer repair orders closed, as of the date of submission, within the preceding 180 days:

1. 100 qualifying sequential customer-paid repair orders; or

2. 90 days of qualifying customer-paid repair orders.

(ii). With respect to parts, a schedule of compensation established under this subsection shall be equal to the parts mark-up percentage as reflected in qualifying repair orders, calculated by dividing the total charges for parts in the repair orders by the total dealer cost for the parts minus one.

(iii) 1. A dealer may not make a submission under this subsection more than once in 1 year.

2. For purposes of subsubparagraph 1 of this subparagraph, a revision or supplement to a submission to correct or clarify the submission does not constitute a new submission.

(4) Repair orders for labor or parts in connection with any of the following may not constitute a qualifying repair order under paragraph (2) of this subsection:

(i) Accessories;

(5) If a licensee gives a dealer a part at no cost to use in performing a repair under a recall, campaign service action, or warranty repair, the licensee shall compensate the dealer for the part by paying the dealer the parts mark-up percentage established under this subsection on the cost for the part listed on the licensee’s price schedule.

(6)(i). The schedule of compensation submitted under paragraph (3) of this subsection shall be presumed to be accurate and reasonable.

(ii) The licensee shall approve or rebut the dealer’s submission within 30 days of receipt.

(iii) If the licensee approves a dealer’s submission, the licensee shall begin compensating the dealer under the schedule within 30 days after the date of approval.

(iv) In the absence of a timely rebuttal by the licensee, the schedule of compensation submitted by the dealer shall go into effect on the 31st day following the licensee’s receipt of the schedule.

(v) Any rebuttal of the schedule of compensation by the licensee shall:

1. Be delivered to the dealer within 30 days of the licensee’s receipt of the schedule; and

2. Consist of reasonable substantiating evidence that the declared rate is materially inaccurate.

(vi) In the event of a timely rebuttal, on resolution of the matter by agreement of the parties or by administrative, judicial, or other action, a licensee’s payment obligations under the resulting schedule of compensation shall begin on the 31st day following a final order unless otherwise provided for by the fact finder.

(vii) 1. To the extent that any action commenced under subsection (d) of this section or § 15-213 or § 15-214 of this subtitle involves the application of paragraph (3) of this subsection, the issues shall be limited to whether the labor rate or parts mark-up percentage stated in the dealer’s submission was materially inaccurate.

2. A licensee shall have the burden of proving under this subparagraph that the dealer’s submission was materially inaccurate.

(viii) 1. A licensee may verify a dealer’s effective rates once annually.

2. If a licensee finds that a dealer’s effective rates have increased or decreased, the licensee may increase or decrease, respectively, the warranty reimbursement rate prospectively.

(7) A licensee may not directly or indirectly:

(i) Calculate its own labor rate or parts mark-up percentage on a warranty reimbursement rate submission by the licensee’s dealer under this section, or require a dealer to calculate a labor rate or parts mark-up percentage, by any method not required under this section, including a method that is unduly burdensome or time-consuming or that requires information that is unduly burdensome or time-consuming to provide such as:

1. A part-by-part or transaction-by-transaction calculation; or

2. Presentation of information as to, or calculations based on, the dealer’s or other dealers’ warranty compensation;

(ii) Establish or implement a special part or component number for parts used in warranty fulfillment, if the special part or component number results in reduced compensation for the dealer unless the part is used for specific, limited repair situations;

(iii) Require or coerce a dealer to change the prices for which it sells parts or labor for retail customer repairs;

(iv) Take adverse action against a dealer because the dealer seeks compensation under this section, by:

1. Implementing a process that is inconsistent with the licensee’s obligations to the dealer under this subtitle; or

2. Failing to act in good faith;

(v) Conduct any warranty or retail customer repair audit, or other service-related audit, solely because the dealer makes a request for warranty reimbursement at retail rates in the ordinary course of business; or

(vi) Establish, implement, enforce, or apply any policy, standard, rule, program, or incentive regarding the compensation due under this section other than in a uniform manner among the licensee’s dealers in the State.

(8) The provisions of paragraphs (1) through (7) of this subsection do not apply to travel trailers or parts of systems, fixtures, appliances, furnishings, accessories, and features of motor homes that are not manufactured by the manufacturer of the motor home as a part of the unit.

(9)(i) A claim filed under this section by a dealer with a manufacturer or distributor shall be:

1. In the manner and form reasonably prescribed by the manufacturer or distributor; and

2. Approved or disapproved within 30 days of receipt.

(ii) A claim not approved or disapproved within 30 days of receipt shall be deemed approved.

(iii) Payment of or credit issued on a claim filed under this section shall be made within 30 days of approval.

(10) A dealer’s failure to comply with a specific requirement of the manufacturer or distributor may not constitute grounds for denial of the claim or reduction of the amount of compensation paid to the dealer if the dealer presents documentation or other reasonable evidence to substantiate that the repair and the claim were done according to manufacturer warranty guidelines.

(11)(i) If a claim filed under this section is shown by the manufacturer or distributor to be false or unsubstantiated, the manufacturer or distributor may charge back the claim within 9 months from the date the claim was paid or credit issued.

(ii) This paragraph does not limit the right of a manufacturer or distributor to:

1. Conduct an audit of any claim filed under this section; or

2. Charge back for any claim that is proven to be fraudulent.

(iii) An audit under this paragraph shall be conducted according to generally accepted accounting principles.

(12) A licensee may not prohibit a dealer from, or take any adverse action against a dealer for, providing to a customer information given to the dealer by a manufacturer related to any condition that may substantially affect motor vehicle safety, durability, reliability, or performance.

(13) A dealer may provide the information specified in paragraph (12) of this subsection only to a customer that has:

(i) Purchased the vehicle for which the information pertains from the dealer; or

(ii) Had the vehicle for which the information pertains serviced by the dealer.

(14) A licensee may not deny a claim, reduce the amount of compensation to a dealer, or process a charge back to a dealer for performing covered warranty or required recall repairs on a vehicle:

(i) For resolving a condition covered by the licensee’s original warranty;

(ii) For remedying a safety-related defect that is subject to an outstanding recall under federal law;

(iii) If the dealer properly performed the repairs and submitted the claims; or

(iv) If the dealer discovered the need for repairs:

1. During the course of a separate repair requested by the customer; or

2. Through notice of an outstanding recall under federal law for a safety-related defect.

(d) As to any person licensed under this subtitle, instead of or in addition to revocation, suspension, or nonrenewal of a license under this section, the Administrator:

(1) May order the licensee to pay a fine not exceeding $50,000 for each violation of this subtitle; and

(2) May order the licensee to compensate any person for financial injury or other damage suffered as a result of the violation.

History:

Added by Acts 1977, c. 14, § 2, eff. July 1, 1977. Amended by Acts 1985, c. 141; Acts 1993, c. 615; Acts 1994, c. 498, § 1, eff. Oct. 1, 1994; Acts 1995, c. 629, § 1, eff. Oct. 1, 1995; Acts 2004, c. 295, § 1, eff. Oct. 1, 2004; Acts 2014, c. 45, § 5; Acts 2014, c. 326, § 1, eff. Oct. 1, 2014; Acts 2016, c. 720, § 1, eff. Oct. 1, 2016.

Additional Remedial Provisions:

§ 15-213. Right of injured persons to sue

Notwithstanding any administrative or criminal sanctions imposed by this subtitle, if a person suffers financial injury or other damage as a result of a violation of this subtitle by any other person, whether or not that other person has been found guilty of a criminal violation, the injured person may recover damages and reasonable attorneys’ fees in any court of competent jurisdiction.

§ 15-214. Hearings to resolve disputes or seek clarification or interpretation of subtitle

In addition to any other right to request a hearing under this subtitle and notwithstanding any provisions of the franchise agreement to the contrary, a dealer, designated dealer successor as provided in § 15-211.1 of this subtitle, manufacturer, distributor, or factory branch may request a hearing under Title 12, Subtitle 2 of this article to:

(1) Resolve a dispute under any provision of this title between a dealer or a designated dealer successor and a manufacturer, distributor, or factory branch; or

(2) Seek clarification or interpretation of any provision of this subtitle