Thursday, 31 August 2006 17:00

No. Calif. shops accuse GEICO of steering and unreasonable labor rates

Two northern California body shops have stepped up to the plate in an effort to stop illegal steering in the state. Competitors G&C Autobody and Dibble's Autobody have joined together in a lawsuit against GEICO (defendant) for steering customers away from their shops and not conducting the proper labor rate surveys to establish reasonable hourly rates. 

The suit was filed in the Sonoma County Superior Court by attorney Colleen Duffy Smith, of McManis, Faulkner & Morgan - a well-known California law firm.

Under California law, an insured or claimant is entitled to have his or her auto repaired at his or her own choice of repair shops. Only if the insured or claimant asks the insurer for a recommendation can the insurer then suggest a specific shop, but even then, the insurer cannot require the insured or claimant to use the recommended shop.

The complaint alleges that for the past two years, the defendants have made negative representations concerning cost, reliability, and capabilities of the plaintiffs with the intention of harming them financially and damaging relationships between the shop owners and their customers.

In a declaration attached to the complaint, one customer explained that after an accident, "I contacted GEICO via its 800-number. When asked where I wanted to take the car," reported the declarant, "I said G&C Autobody. She [the phone operator] then said that I needed to let an appraiser see the car first and that [it was at] Blake's Autobody where their appraiser would do the estimate.

Blatant steering

"When I took my car to Blake's Autobody, Terry Thomas did the estimate, then asked me where I wanted to get the car fixed and I said again, G&C Autobody. He said that they don't deal with G&C because of some small claims lawsuits and that they charge $80 an hour rather than $70 and that [$70] was all they [GEICO] would pay. He said that he would send the check directly to G&C Autobody. He really wanted me to take it to Blake's and the feeling that I got was that he did not want me to go to G&C Autobody. I have always taken my car to G&C Autobody and I saw no reason to change now for a shop that I have never heard of before."


Reasonable rates

A second declarant spoke to the issue of hourly rates. After taking the damaged vehicle to G&C Autobody, "David Scott, the GEICO adjuster, called me and said that GEICO was not going to pay the rate that G&C Autobody charges and that I would be responsible for the balance of the bill that GEICO did not pay. He said that they would only pay a reasonable rate and that they, GEICO, figured their reasonable rate from a shop's rate in Novato. [Ed. note: Novato is a town about one-third the size of Santa Rosa and 25 miles away.]

"David also said that he was going to send me some paperwork in the mail and I asked him if he could send me something quoting the part of my policy that states they only have to pay the reasonable rate. I asked him several times and he finally said that statement did not exist in the policy. David did say that he agreed to everything that G&C was going to do to the vehicle but the problem he had was with the hourly rate that they charged.

"I opened the phonebook and called several shops to find out the rates in the area and they all were between $85 and $95 per hour. I did ask one of the guys that I spoke to if he knew anywhere that I could get the work done for $75 per hour and he said there was a little Mexican shop in Agua Caliente that worked for that cheap but other than that he did not know of any shop in Santa Rosa that would work for that rate.

"If I had not already been at G&C and known the quality of their service I felt that what David was saying to me could have persuaded me to go to a different shop."

Take 'em to court

These declarations along with other numerous complaints have brought G&C Autobody and Dibble's Autobody to ask for the court's judgment against GEICO. The shops are asking the court for compensatory damages; restitution for damages resulting from claims of fraudulent behavior and unfair business practices; and restraining orders against using "artificially lowered rates" as prevailing auto body rate; along with attorneys' fees and interest.

Click here for a PDF version of the complaint.

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