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Tuesday, 10 March 2020 12:12

Insurers Win Again---Mostly---in Antitrust Lawsuits Filed by Body Shops

Written by By Jim Sams, Claims Journal

Index

A federal appellate court threw out most of the claims by automotive body shops in Indiana, Utah and Mississippi alleging major insurers violated anti-trust laws and engaged in anticompetitive practices by steering policyholders to “approved” shops.

The 11th Circuit Court of Appeals found March 6 claims filed by body shops in Indiana and Utah must be dismissed for procedural reasons. 
 
The appellate panel also upheld the dismissal of most of the claims filed by the Mississippi body shops, but it revived specific tortious interference claims by two of the Mississippi body shops against Progressive Insurance.
 
The case is Automotive Alignment & Body Service and Alexander Body Shop LLC v. State Farm Mutual Automobile Insurance Co.
 
The panel decision, which was made by three appellate judges, follows last year’s en banc ruling by all seven 11th Circuit judges dismissing separate lawsuits alleging antitrust violations by insurance carriers. That case was Quality Auto Painting Center of Roselle v. State Farm.
 
Defense attorneys worried a ruling in favor of the body shops in Quality Auto would have allowed plaintiffs to merely cite parallel conduct by competitors as sufficient basis for pleading an antitrust violation.
 
The decision released March 6 stems from multi-district litigation referred to the federal court for the Middle District of Florida. The body shops claimed State Farm group was the leader of a conspiracy involving several insurance carriers to conduct “market rate surveys” that actually were shams intended to reduce the cost of autobody work.
 
The body shops alleged the carriers refused to pay for necessary repairs and procedures, and required body shops to use subpar “aftermarket” parts instead of new parts. The carriers also steer their insureds away from noncompliant body shops and toward body shops that comply with their pricing demands and other requirements, the lawsuits alleged.
 
The 11th Circuit said the complaint was very similar to the price-fixing allegations made in the Quality Auto case and must be dismissed for the same reasons. 
 
The court found the body shops in Quality Auto did not prove the carriers had colluded on price simply because they used similar practices and each had set the same top rates.
 
The 11th Circuit didn’t address the merit of the complaints filed by the Utah and Indiana body shop’s arguments in the Automotive Alignment case decided March 6. The panel found instead the plaintiffs had not met the deadline to file amended complaints after those suits were dismissed by the district court.

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