Insurer antitrust cases piling up

Dec. 2, 2014
In November, dozens of states joined the antitrust suits against State Farm and other insurance companies.

In November, dozens of states joined the antitrust suits against State Farm and other insurance companies.

In Arizona, Legends Collision, Raintree Auto Body, Jan's European Auto Body, New Image Paint and Body Shop, Airport Auto Center, and Orlando Auto Body filed suit against more than 20 insurance companies. In Michigan, Rodenhouse Body Shop was named as the lead plaintiff. Rodenhouse and 11 other shops filed suit against more than 30 insurance companies.

Shops in Mississippi, Florida, Tennessee, Indiana, Utah, and Louisiana have filed similar suits, and shops in nearly 35 states had filed paperwork by Oct. 31 to join the suit. In August, the Judicial Panel on Multidistrict Litigation issued an order to consolidate the anti-trust cases to the Middle District of Florida. Eaves Law Firm in Jackson, Miss., is serving as the lead on the consolidated cases.

A Nov. 14 hearing on the case in Florida was taken under advisement by Senior United State District Judge Gregory Presnell.

Body shops nationwide have been coordinating their efforts in the anti-trust cases. "We customized our complaint for Michigan, and we're waiting for the multidistrict panel to issue an order," said attorney Andrew Rodenhouse of Rodenhouse Kuipers PC, the Grand Rapids firm representing the shops in Michigan. Rodenhouse is the son of Diane Rodenhouse, owner of Rodenhouse Body Shop.

The basis of the anti-trust suits is a claim that the insurers conspired to suppress reimbursement rates in violation of the Sherman Act and state laws. The multidistrict litigation panel chose Florida as the consolidation point because the first case, A&E Auto Body v. 21st Century Centennial Insurance et al., was filed there.

"The argument is that the insurers are using DRP programs to suppress labor rates and not pay for procedures," Rodenhouse says. "Insurance companies were left out of the anti-trust law pursuant to the Consent Decree. We're arguing they are violating the agreement."

Repairers involved in the cases went to Washington, D.C., earlier this year and held more than 150 meetings with representatives and senators to discuss the cases and the challenges faced by the industry. They also pushed for legislation to codify policy set by the 1963 Consent Decree signed by insurers, which required them to refrain from price fixing and coercion.

While the cases in each state make similar claims, there are some differences. In Michigan, for example, the shops are arguing that insurers committed conversion by violating the ownership rights of the shops.

"Michigan has a pretty broad view of what conversion is," Rodenhouse says. "In Michigan, conversion I s any act of dominion or control over the property of someone else. We allege that the defendants have essentially converted the plaintiffs' businesses for their own use. They tell the shops what they are going to pay, how to conduct the repair, what parts to use, and that's the type of thing in Michigan, at least, that can be seen as taking the entire business."

There has been opposition from both the insurers and a few of the plaintiffs in the cases to the consolidation in Florida. On Dec. 4, plaintiffs Crawford's Auto Center and the State of Louisiana, along with Progressive, are scheduled to present arguments opposing the transfer of cases from Illinois and Louisiana before the Judicial Panel on Multidistrict Litigation.

In Louisiana, Attorney General Buddy Caldwell filed suit against State Farm in August, claiming the insurer violated state laws regulating unfair trade practices and monopolies. The Crawford case is a RICO class action case, which focuses on complex consumer fraud rather than antitrust violations. 

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