Michael Leavitt & Co Inspections, Inc.
Here is a claims rejection memo found on the A.O. Smith water heater site found at http://www.hotwater.com/DipTube/Diptube2.htm...
January 1, 2001
Re: Dip Tube Claims
In response to your inquiry regarding dip tube related problems with your A. O. Smith water heater, I am sorry to say that our company is not allowed to help you at this time. Here is an explanation why.
Certain water heaters manufactured by A. O. Smith Water Products Company between August 1993 and March 1997 contained potentially defective dip tubes that were manufactured by Perfection Corporation of Madison, Ohio. A dip tube is a plastic tube that runs from the cold water inlet at the top of the water heater through the inside of the tank and delivers cold water to the area in the water heater where it can be heated. The dip tubes in the affected water heaters were potentially defective because of problems associated with the polypropylene formula and manufacturing processes employed by Perfection in manufacturing the dip tubes. The defect caused dip tubes to fail prematurely by disintegrating inside the water heater. Symptoms of failure include the loss of hot water, decreased water pressure, and the presence of dip tube particles in hot water lines as well as places where dip tube particles could be trapped, such as faucet and shower head aerators and dishwasher and washing machine filters.
A. O. Smith Corporation and the other major manufacturers of water heaters in the United States purchased defective dip tubes from Perfection Corporation. In 1999, A. O. Smith, the other water heater manufacturers, and Perfection Corporation were sued in a number of class action lawsuits around the country. Those class actions and all claims related to property damage caused by defective dip tubes in water heaters manufactured during the relevant time period have been resolved through a class action that was brought in the U. S. District Court in the Western District of Missouri Division, in Kansas City, Missouri captioned Paul Heilman, et al. v Perfection Corporation, Rheem Manufacturing Company, American Water Heater Company, Bradford White Corporation, A. O. Smith Corporation, Lochinvar Corporation and State Industries, Inc.; Case No. 99-0679-CW-W-6.
The water heater manufacturers, the plaintiff attorneys, and the representative class members entered into a settlement agreement in that class action and the settlement was approved by the U. S. District Court. It provides that the following forms of relief were available to owners of affected water heaters and that all necessary work would be performed at no cost to the water heater owner:
The terms and conditions of the settlement agreement provide that all claims related to property damage caused by dip tube failures in water heaters covered by the settlement were to be resolved by an independent claims administrator and not by the water heater manufacturers. The Garden City Group of Crawford & Company was agreed upon by the parties and approved by the Court to act in that capacity. The water heater manufacturers gave full power and authority to the Garden City Group to resolve all claims as provided in the settlement agreement.
Each person who owns an A. O. Smith water heater that contains a dip tube manufactured by Perfection Corporation and was purchased during the relevant time period is a “class member” a member of the class of individuals who were entitled to benefits under the class action settlement. A. O. Smith water heaters that are included in the class action can be identified by their serial number. The first letter of the serial number is either “M” or “G”. The second letter is “A” through ”M” and identifies the month of manufacture, with “A” representing January, “B” for February, etc. The letter “I” is not used in that system. The next two digits identify the year of manufacture. So water heaters with serial numbers beginning with MH93 or GH93 through MC97 or GC97 are included in the class action. If you own an A. O. Smith water heater with a serial number that falls within that range, you are a class member.
The remedies provided in the class action settlement are the exclusive remedies that are available to class members for property damage caused by defective dip tubes. Class members are prohibited from taking any separate legal actions to recover damages for property damage caused by defective dip tubes in water heaters covered by the class action unless they filed a proper election to be excluded from the class.
Class members began receiving benefits under the settlement agreement in November 1999. The settlement agreement provides that the last date for filing claims for relief under the settlement agreement was December 31, 2000.
A. O. Smith and the other water heater manufacturers went to great length to give notice of the class action settlement to class members. As a group, the water heater manufacturers spent millions of dollars taking the following actions to provide notice:
In addition, there were numerous stories about the dip tube problem and the class action settlement on radio and television news and consumer affairs programs, including feature stories on 20/20 and Good Morning America. Consumer Reports magazine also chronicled the dip tube situation.
Before the class actions were filed, A. O. Smith did its best to make sure that owners of A. O. Smith water heaters were able to get defective dip tubes replaced and related plumbing repairs made at no cost to them, even though the problem was caused by the actions of Perfection Corporation and not by A. O. Smith. When the class action lawsuits began and the settlement was put in place, A. O. Smith was required to give the Garden City Group full authority to make decisions regarding dip tube related repairs caused by the defective dip tubes in A. O. Smith water heaters.
The class action settlement provided an opportunity for owners of affected water heaters to have their dip tube related problems fixed at no cost to them. A large number of class members have taken advantage of the program and the water heater manufacturers have spent tens of millions of dollars to pay for dip tube repairs in addition to the amounts they spent to have repairs made before the class action began. However, the class action settlement program has ended and, except for people who properly filed claims prior to December 31, 2000, no more repairs will be made under the program. There are many legal issues involved that make it impossible for A. O. Smith to continue to make such repairs outside of the class action settlement agreement. Therefore, if you are an owner of an A. O. Smith water heater that is covered by the class action settlement and you did not file a claim within the required time period, it is unfortunate, but A. O. Smith is not able to provide services to replace your water heater's dip tube or make related plumbing repairs.
You should be advised that even though Perfection Corporation manufactured 100% of the defective dip tubes that led to the class action, it has not paid for any of the repairs that have been made under the settlement agreement. To date, those costs have been paid entirely by the water heater manufacturers.
Thank you for your inquiry.
A. O. Smith Water Products Company
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