Insurer-Repairer Tensions Reaching Crucial Juncture
Shops have woken up; it’s that simple, says Scott Blake, shop owner and president of the Indiana Auto Body Association (IABA).
“People are looking around and saying, ‘We have a choice to make—we can either close our doors and do something else, or we can start fighting for our rights,’” Blake says.
And, as the headlines would suggest, more and more repairers across the country are choosing the latter.
A nationwide movement has begun, as repair professionals have taken to the courts and the political arena in an attempt to break free in what they view as an industry clamped down by the oppressive demands of insurance providers. Lawsuits and legislation are in the works, and if repair shops come out as the winners, it all could have drastic ramifications felt across all segments of the industry.
“It could change everything,” says John Mosley, owner of Clinton Body Shop in Mississippi and one of the industry veterans at the forefront of a recent wave of litigation against insurance carriers.
There are a lot of moving pieces at play, though, and the movement has only reached a midway point, Mosley says.
FenderBender spoke with the key players involved with the issue to help outline what lies ahead.
A Look Back
Mosley, who first turned to litigation to receive short pays from an insurer in 1996, says the breaking point arrived with State Farm’s implementation of its parts procurement program through PartsTrader for Select Service shops.
What started as a flurry of announcements—a legal filing in Mississippi, a lawsuit in Florida, the IABA starting a class-action campaign in Indiana—has turned into a nationwide wave of wrongful practice litigation against insurance carriers.
Repairers from several states have enlisted the legal muscle of John Arthur Eaves Jr, a Mississippi-based attorney who’s worked on a number of high-profile cases around the world. Eaves has been at the forefront of this fight and, as of press time, has repairers in 41 states having filed or preparing to file suits as part of the collective effort. He told FenderBender that he expects all 50 states to be involved by the time the case, which has been consolidated to Florida’s U.S. District Court, goes to trial in the next 18 months or so.
For their part, insurers have strongly disputed the claims, and filed a motion to dismiss in late September. The motion was not ruled on as of time of print.
Also, with the help of Eaves, a group of repairers have taken the fight to Capitol Hill, staging a mid-September rally in Washington D.C. with the hope of spurring legislation that would reinforce the 1963 Consent Decree as U.S. law and put an end to what the industry claims to be illegal practices by insurance carriers.
The real game-changer, though, happened in August when Louisiana Attorney General Buddy Caldwell filed suit against State Farm on behalf of consumers, a landmark moment that brought charges of collusion and unsafe practices against insurers out of the collision industry fishbowl and into the public forum.
The attorney general’s office brought similar claims in its suit—steering, unsafe requirements in repairs, short-pay issues, etc.—but the real difference, says assistant attorney general Stacie Deblieux, will be awareness. The average consumer will now be made aware of what her office believes are illegal actions being taken by insurance carriers.
It’s been a “from-all-angles” attack, Eaves says.
Auto insurance providers, individually and collectively, have denied the accusations.
“The description in the lawsuit filed by the attorney-general [sic] in Louisiana is not in line with State Farm’s mission to serve the needs of its customers, and our long, proud history of achievements in advancing vehicle safety,” State Farm spokesman Dick Luedke says. “A vibrant, profitable auto collision repair industry is in the interest of State Farm and other auto insurers. At the same time, we are advocates on behalf of our customers for reasonable repair costs. We believe repairer profitability and quality auto repairs that are reasonably priced can both be achieved.”
A Look Ahead
Shops can still join in on the multidistrict suit by contacting Eaves’ office, he says. More shops means more evidence in court. And according to Eaves, the evidence is overwhelming. His team has collected affidavits, depositions and “millions” of documents outlining the claims repairers are making.
Liking his chances, Eaves wanted an expedited trial and was hoping to go to court within the next 12 months. The Florida U.S. District Court judge handling the case is expected to set the timeline for the trial at some point between a hearing on Nov. 14 and a status conference on Dec. 5.
From the time of that announcement, there will likely be a 60-day waiting period before the information-gathering phase of the trial begins. That is when insurance companies will be forced to turn over internal documents, Eaves says.
In Louisiana, no date has been set for a trial in the attorney general’s case. Deblieux says it would be reasonable to assume that more states will follow in her office’s footsteps and file on behalf of their consumers.