Owners of small businesses ranging from auto repair shops to restaurants and nail salons have been howling about the lawsuits being filed against them in massive numbers by attorneys who allegedly abuse a section of the state's Unfair Competition Law known commonly as the Private Attorney General Act (Business & Professions Code Section 17200). The attorneys can use Section 17200 to sue small businesses and then pressure them for a quick settlement. In the case of auto repair, over 2,000 mechanical and collision repair shops have been sued, many of them for nothing more than a technical violation of BAR regulations such as failing to renew their registration on time - matters which they have since corrected. While many call such suits frivolous, they can never-the-less be costly to defend, and many business owners have chosen to settle them.
Two bills that prohibit automobile insurers from having an ownership interest in an auto body repair facility have been introduced in the Texas legislature and appear to enjoy considerable support. Texas Senate bill 435, introduced by State Sen. John J. Carona (R-Dallas) on February 17, has 14 co-sponsors and has been referred to the Business and Commerce Committee.
A bill to strengthen the California anti-steering laws was introduced in the California State Senate by Sen. Jackie Speier (D-San Francisco) on February 20. The bill would prohibit an insurer from recommending that an automobile be repaired, or not be repaired, at a specific auto body repair shop, unless the claimant specifically requests a referral. It would allow a claimant or repair shop damaged by a violation of this provision to recover damages and costs.
Attorney General Bill Lockyer on February 26 filed a consumer protection action against the Trevor Law Group of Beverly Hills, alleging the firm committed unfair business practices in slapping thousands of small businesses with abusive lawsuits filed solely to obtain nuisance settlements and attorneys fees.
The State Bar of California announced in mid March that it has filed a petition to enroll inactive three attorneys from the Beverly Hills firm Trevor Law Group who allegedly defrauded small business owners under Business & Professions Code Section 17200.
When John Garamendi was campaigning last fall to be elected California Insurance Commissioner, he addressed the California Autobody Association and said one of his priorities would be to revisit and strengthen the Fair Claims Settlement Practices (FCSP) regulations - the regulations that govern how insurers must handle claims.
A Los Angeles County judge has dismissed nine lawsuits filed against thousands of LA County mechanical and auto body repair shops by the Beverly Hills law firm Trevor Law Group. The lawsuits enraged the defendant shop owners and caught the eye of the media, resulting in a myriad of actions begin taken by the State Attorney General, the State Bar Association and the State Legislature.
Texas House Bill 1131, sponsored by Reps. Kino Flores (D-Mission), Kenny Marchant (R-Carrollton), Joe Driver (R-Dallas), Allan Ritter (D-Nederland), and Rick Hardcastle (R-Vernon), now has over 80 co-sponsors. The bill will make it illegal for an insurance company to have any ownership interest in an auto body repair facility.
The proposed Texas law that would prohibit insurance companies from owning body shops took major steps forward in April, passing the Assembly (HB 1131) and securing enough sponsors to insure passage in the Senate, but ran into stiff opposition from Texas Lt. Governor David Dewhurst, forcing a redrafting of the legislation into a more comprehensive bill, but one that would allow Allstate to keep its current Sterling Collision Centers.
The issue of reuse of non-deployed airbags from salvaged vehicles returned to the spotlight at the Collision Industry Conference in Phoenix in April with a panel discussion that included information on a program being developed to certify such airbag modules.
The California Senate Committee on Insurance has passed Senate Bill 551, a bill that would prohibit an insurer from recommending a motor vehicle be repaired at a specific shop unless the insured requests such a referral. It allows an insured or other claimant or repair dealer to recover damages, if harmed by a violation of this provision.