The Rhode Island Supreme Court has agreed to hear appeals filed by the Property Casualty Insurers Association of America (PCI) and Rhode Island Department of Business Regulation (DBR) contesting a recent ruling on the state’s autobody labor rate surveys.
MORE ON R.I. LABOR RATES
In August, a Superior Court judge ruled that insurers must use a labor rate survey as the sole determinant of the prevailing auto body labor rate. The Supreme Court moved to stay the lower court’s decision, pending the upcoming hearing. PCI and DBR’s separate appeals were also consolidated.
The case, Auto Body Association of Rhode Island (ABARI) vs. State of Rhode Island Department of Business Regulation (RIDBR), began after a dispute over the department’s interpretation of Rhode Island law that the labor rate survey is not the sole determinant of the prevailing labor rate. Insurers had traditionally been able to use a variety of factors to determine the rate.
The 2006 labor rate survey statute requires that insurance companies with more than 1 percent of the market use a standardized form to survey body shop labor rates.
When ABARI appealed the DBR’s decision to the Superior Court, PCI made a filing in the case asking the court to affirm the original interpretation. After the Superior Court judge ruled in favor of ABARI, PCI filed a motion for clarification, asking the judge to alter the language of the ruling. The judge then reaffirmed her original decision, prompting PCI and DBR filed a writ of certiorari (a request for judicial review) with the Supreme Court asking for an appeal. (Rhode Island law does not automatically provide appeals from a superior court decision on an agency determination.)
PCI and DBR argued that the Superior Court decision was contrary to the language of the statute and “failed to give adequate deference to the DBR’s interpretation.”
Both sides will submit additional briefs and memoranda over the next several months, with a hearing expected some time in early 2009.
“I am not surprised that the court agreed to hear the case,” said Jina Petrarca-Karampetsos, ABARI’s attorney. “In fact, I was pleased, because we’d like to have some finality on this issue. The fact that the court accepted the writ of certiorari is no indication of how it will rule on the merits. We’re not discouraged by this development at all.”
Law firm Edwards Angell Palmer & Dodge filed amicus briefs urging the Supreme Court to grant the petitions from Amica Mutual Insurance Company and Providence Mutual Insurance Company. The American Insurance Association (AIA) and National Association of Mutual Insurance Companies (NAMIC) also filed amicus briefs in the case. Those filings raised additional constitutional concerns, claiming the original decision granted rate-making authority to collision repair shops with no government oversight.
“PCI is pleased and encouraged that the Supreme Court agreed to hear the appeal,” says Frank O’Brien, vice president and regional manager for PCI. “The previous ruling removed any checks and balances regarding the establishment of a reasonable labor rate, opening the door to drivers and insurers being socked with inflated auto body repair labor rates and ultimately higher repair costs. Efforts to make sure repair costs are reasonable benefit all consumers because they help contain the cost of auto insurance.”
For now, insurance companies were still required to file their labor rate surveys, which were due on Sept. 26, but per the stay on the Superior Court’s decision, insurers can set labor rates using their traditional methods.
