Friday, 21 March 2014 21:40

Property and Casualty Insurers Hit With Antitrust Suit by Florida Auto Body Shops

On February 24, 2014, a group of Florida auto body shops filed an antitrust action against over forty property and casualty insurers in the U.S. District Court for the Middle District of Florida.

In the case, A&E Auto Body versus 21st Century Centennial Insurance Company, d/b/a Farmers Insurance Group et al., the plaintiffs allege that the State Farm vendor agreement requires shops desiring to participate in this preferred provider program to accept the market rate for such services, and that State Farm calculates those rates in an improper manner that keeps them artificially low and not representative of the true market for such services.

The plaintiffs also allege that the remaining insurer defendants in Florida have advised plaintiffs that they will pay no more than State Farm pays for labor at their shops, thus resulting in a stabilizing of rates at these allegedly low levels.

In addition to a number of common law counts, plaintiffs assert that defendants’ conduct constitutes price fixing under Section 1 of the Sherman Act. In search of evidence of agreement amongst the defendants (a necessary element of a Section 1 claim), plaintiffs allege that the insurers agreed to control and suppress automobile damage repair costs at meetings amongst themselves that they refused to allow members of the auto collision repair industry to attend.

Plaintiffs also contend that defendants’ alleged conduct constitutes unlawful boycott activity. In support of that assertion, plaintiffs maintain that the defendants’ alleged acts of steering customers away from plaintiffs, through allegations and intimidation of poor work quality places defendants’ conduct beyond the limited antitrust exemption that the insurance industry enjoys under the McCarran Ferguson Act.

The action is in its earliest stages, and the insurers have not yet responded to plaintiffs’ allegations.

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