In a potentially far-reaching decision, the California Court of Appeals has decided that there is a Private Right of Action Against California Insurers who Violate California Insurance Code Section 758.5. This ruling appears to allow for insurance companies to be sued for violations of the state's anti-steering law, Insurance Code section 758.5. In this specific case, the insured was awarded at least his legal costs in bringing the case against Progressive.
However one of the Justices (Woods), while agreeing with the decision, says he sees "storm warnings on the horizon," saying it may enable superficial lawsuits.
The California Court of Appeal, Second Appellate District, published its decision on June 15 which reversed a dismissal in favor of an insurer of a claim filed under California’s Unfair Competition Law (UCL). The UCL claim was based solely on the insurer’s alleged violation of Insurance Code, section 758.5, which prohibits an insurer from steering (requiring or even suggesting its insured use certain automobile repair shops).
In Hughes v. Progressive Direct Insurance Company (2011), the Second Appellate Court reversed the trial court’s order and instead held that the appellant may maintain an unfair competition law (UCL) cause of action because Insurance Code section 758.5 does not expressly bar UCL claims.
The appeal hinged on whether or not a 1988 California Supreme Court decision, Moradi-Shalal v Fireman's Fund Insurance Companies, which reversed a Court of Appeal decision in the same case, prohibited a private cause of action against an insurer in this case, Hughes v. Progressive Direct Insurance. The Court of Appeals has determined that it does not, i.e., a private party can sue for cumulative remedies (more than one form of compensation at a time) under a UCL claim referencing Insurance Code section 758.5.
Section 758.5 was enacted to prevent insurance companies from using coercive tactics to steer consumers to particular automobile repair shops or dissuade consumers from using a repair shop of their own choosing. California’s UCL comprehensively prohibits any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made. It is not necessary that the predicate law provide for private civil enforcement. The Court of Appeal concluded that: “Given the breadth of the UCL, absent some competing principle of law, a violation of section 758.5 should be a proper basis for Hughes’s UCL claim."
The Obama administration is considering requiring cars and light trucks to average 56.2 miles per gallon by 2025—a move that could end up boosting the cost of vehicles by $2,100 or more.
That represents an improvement of about a 5 percent per year in each company’s fleetwide average fuel economy from 2016--when they are required to have a 35.5 mpg average for vehicles sold in the US, according to Bloomberg.
Federal regulators and White House executives met with the Detroit Big Three automakers and foreign-based automakers earlier this month to debrief them on the initial proposal, according to the Wall Street Journal. The White House also has met with the UAW on the issue.
The 56.2 mpg figure and EPA's proposed greenhouse gas emissions limits equivalent likely is an opening bargaining point. The final proposal could change as automakers and the White House hold more meetings to try to reach agreement.
“There’s a way to go in this process,” said Greg Martin, a spokesman for Detroit-based GM, according to Bloomberg. “Any number out there right now has the rigidity of Jello.”
The administration hopes to formally propose new standards in September and finalize them by July 2012.
This week, a prior Collision Industry Legal Fund contributor sent yet another check for another $2,500 aimed at assisting body shop owner Ray Gunder in his ongoing battle with State Farm Insurance Company. The donation came with a simple note:
“Ray, Thank you for everything you do! You’re the BEST!”
The Collision Industry Fund was established last year to provide financial assistance to Gunder’s Auto Center in Lakeland, Fla., which has been involved in a lawsuit against State Farm for slander and tortious interference, as well as the failure to pay for certain repair procedures. “This mirrors this same contributor’s record donation they provided last year! We remain extremely grateful and thankful for the donation and support” stated Ray Gunder. I’m thankful for all the financial support we’ve received from people we don’t even know from across the country. I’m humbled at the support we’ve received and encouraged to continue on with our efforts to level the playing field.
According to Barrett Smith with Auto Damage Experts; “This fight isn’t just about Gunder’s and our customers, or just about State Farm; it’s about repairers and their customers across the country that face the same issues of abuse daily from many insurers. State Farm has and continues to stall and delay and outspend us but so far, and by the grace of God, we have reached a point I believe will come to a positive outcome sooner than later."
To mail a donation to the fund, make the check out to "The Collision Industry Legal Fund" and send to: Brent Geohagan, Attorney at Law, 3001 Bartow Rd., Lakeland, FL 33803.
Texas Commissioner of Insurance Mike Geeslin has warned auto insurers in a bulletin that some claims settlement practices may be in violation of Texas law. Geeslin's bulletin says that reports of steering, limiting labor/reimbursement rates, and other potential unfair claim settlement practices continue to be received by his department.
The current bulletin can be viewed HERE and last year's bulletin can be viewed HERE
In a department bulletin, addressed to insurers writing property casualty insurance for autos, the commissioner repeated his charge that some insurers' practices may be in violation of the Texas Insurance Code and or the Texas Administrative Code. In a direct address to the issue of steering, Geeslin says that insurers must not "directly or indirectly" require a claimant to use a specific repair facility or to select a specific facility from a list provided by the insurer.
The Repair Standards Advisory Committee, formed by the Collision Industry Conference (CIC) to address the desire for standards in the collision repair industry, announced that work has formally begun on the business case for an independent repair standards organization. The study is scheduled to be completed by early November in preparation for the meetings taking place in Las Vegas during the SEMA show.
The work on the business case will include interviews designed to establish the level of industry support for repair standards, as well as an evaluation of the different business models that may sustain the standards effort going forward.
"Our interview schedule is very aggressive," said Russell Thrall III, co-chair of the Repair Standards Advisory committee. "The key to the success of this research is the involvement of all segments of the broader industry, repairers, insurers, suppliers, vehicle manufacturers and others, in the research."
Allstate Insurance will soon roll-out technology that will enable shops that are not part of the insurer’s direct repair program to communicate electronically with the insurer, much as its DRP shops do.
Dan Risley, a project manager for Allstate at the company’s Illinois home office, said this new “Transactional Non-DRP” system will enable any shop to upload estimates and digital images to Allstate, receive insurer-written estimates from Allstate, etc.
“We realize not all customers use a network shop, and we want to make it easier to do business for those shops and for our customers,” Risley said.
Risley’s discussion of the forthcoming change was just one of recent news items related to insurance companies that will likely be of interest to shops. Here’s a wrap-up of some of this news.
Insureds are shopping. Consumers shopped and switched auto insurers more aggressively in 2010 than they have for 14 years, according to preliminary survey findings from McKinsey & Co.
The survey analysis authors told Auto Insurance Report that the percentage of consumers who got a quote from another insurer was up 23 percent last year, and the percentage of those who actually changed to another insurer was up 56 percent. Only 48 percent of consumers have been with the same insurer for six or more years, down from 53 percent in 2008.