Sept. 13, 2017—Collision repair facilities claiming insurers had unjustifiably depressed repair prices recently won a reversal in federal appellate court, the Daily Business Review recently reported.
The U.S. Court of Appeals for the Eleventh Circuit reinstated antitrust multidistrict litigation late last week that claims at least 10 insurance companies partnered to set an arbitrary reimbursement rate for repairs.
The body shops also have alleged that the insurance companies—including State Farm, Travelers, Progressive, Allstate Insurance Co., Nationwide Mutual Insurance Co., USAA, Hanover Insurance Group, 21st Century, GEICO, and Liberty Mutual Insurance—steer policyholders away from shops that charge higher rates. That practice amounts to illegal price-fixing, the collision repair facilities claim. The federal and state claims had been initially dismissed by a federal judge in the U.S. District Court for the Middle District of Florida. The Eleventh Circuit ruled that the body shops’ facts were sufficient to imply an agreement and move the lawsuit forward, however, based on the allegation that the insurance companies use a market labor rate that one company, State Farm, “determines and manipulates.”
The shops’ argument against State Farm also alleges that the insurance company manipulates rates entered into a database initially by removing or threatening to remove shops that submit above-market rates, according to court documents.
“By using an unverified method of calculating the market labor rate and by manipulating the results, State Farm achieves a wholly artificial market labor rate,” the court noted in describing the allegations.
State Farm said it is reviewing the decision, the Daily Business Review reported.
