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Wednesday, 07 November 2018 22:17

Reinstatement of Auto Insurance Price-Fixing Claims Considered by 11th Circuit

Written by Greg Land, Daily Report
Mark Shurtleff (left) and John Eaves. Republished with permission. Mark Shurtleff (left) and John Eaves. Republished with permission. John Disney/ALM/Daily Report


The U.S. Court of Appeals for the Eleventh Circuit heard arguments Oct. 23 leveled by a group of auto body repair shops claiming State Farm Insurance and a host of other national carriers are conspiring to fix prices.


The plaintiffs say the insurers have conspired to drive down the prices they’re charged for repair services by agreeing among themselves to pay a preset “market rate” and to enforce compliance by “steering” their insureds to businesses that play ball, effectively boycotting other shops.


In addition to State Farm, the defendants include Allstate, Progressive, GEICO, Nationwide, USAA, Liberty Mutual and Hartford, among others.


Sitting en banc, the judges were considering whether to keep alive multidistrict litigation that was tossed out by a district judge for failure to state a claim, then revived by a split panel last year.


The cases have been combined in Florida’s Middle District, and the instant appeals represent five of 14 similar complaints combined in the action. The body shops in the MDL are in Kentucky, Missouri, New Jersey and Virginia.


Although there are certain variations in the individual complaints, in general they allege the insurers have all agreed to follow a market rate established by State Farm, which is accused of using a method of ranking body shops by criteria, including number of employees, number of work bays and area density, which it then “manipulates” as it solicits businesses to be part of its direct repair program.


If a body shop in the program tries to charge rates higher than those demanded by State Farm, they are met with an “ongoing pattern of coercion and implied threats” to enforce compliance, according to court filings.


Shops not complying are dropped from the program, and customers are “steered” away by the insurer.


In 2016, the five complaints at issue were dismissed for failure to state a claim, but a split panel reversed that ruling last year. The majority opinion was written by Judge Charles Wilson with the concurrence of Washington Western District Judge Barbara Rothstein, sitting by designation. Judge R. Lanier Anderson dissented.

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