May 14, 2014—Crawford’s Auto Center Inc. in Downington, Pa., has filed a lawsuit against seven major insurance carriers and their affiliates, accusing them of short pays and conspiring to establish and enforce “an artificial market value for collision repairs,” according to the complaint.
The suit was filed in an Illinois district court on April 30, and names State Farm, Allstate, GEICO, Progressive, Farmers, Liberty Mutual and Nationwide as the lead defendants, along with a slew of their respective subsidiaries.
Attorney Steven L. Bloch of Berger & Montague P.C., representing Crawford’s Auto Center, told FenderBender that the suit was filed in Illinois for strategic purposes, as “several of the defendants are based in Illinois and conduct a great deal of their business either in Illinois or emanating from Illinois."
“I think [the suit] speaks for itself,” Bloch said Wednesday when reached by phone. It stems from “the artificial establishment and perpetuation of a so-called prevailing rate, which is used to suppress compensation to collision repair facilities.”
Filing under the Racketeer Influenced and Corrupt Organizations Act (RICO), the suit accuses the defendant insurers of “long-running unlawful conduct to suppress compensation” to shops.
The suit goes on to say that the insurers have worked to implement a “prevailing rate” for collision repair compensation that is lower than that of market value, aided by industry information providers that the suit labels as “conspirators.”
This is the latest in a recent string of lawsuits filed on behalf of the collision repair industry against insurers.
The Mississippi Collision Repair Association, along with a number of its affiliated body shops, filed last summer to block State Farm’s PartsTrader electronic parts procurement mandate for its Select Service shops; a Tennessee shop accused Progressive of steering and underpament in November; and an Ohio MSO alleged short pays from State Farm in another suit in March.
There is also a suit pending from industry advocate and shop owner Ray Gunder to block the State Farm PartsTrader initiative in Florida, and a suit recently filed on behalf of a number of Indiana shops.
