Consumers and body shops alike can take heart in this victory over the oppressors of free enterprise and fair business practices.
The latest class action lawsuit, filed by ABAC charged that The Hartford “engaged in a pattern of unfair [business] practices” that violated Connecticut law. The jury agreed.
The Hartford was found guilty of “artificially suppressing body shop labor rates.” The Hartford was able to suppress the labor rates, according to the court, by using Hartford appraisers “exclusively” so the insurer could control the “content of the appraisals” as well as the labor rate. Therefore, the consumer did not get “fair, independent appraisals of the damage to their automobiles,” according to ABAC.
Bob Skrip, president of ABAC, is the owner of Skrip’s Auto Body, Inc., in Prospect, Connecticut. “We are gratified that the jury agreed that The Hartford systematically violated the Connecticut Unfair Trade Practices Act,” he said.
According to the lawsuit, The Hartford’s “customer care team specialists” were told to direct (steer) the customers to a “preferred shop” in The Hartford’s “customer care repair service program.” Consumers were routinely “pressured” to take their damaged vehicle to The Hartford’s preferred shop, where appraisers, employees of The Hartford, would have “control over the repair.”
By having “control over the repair” The Hartford was able to “force auto body shops” to charge labor rates lower than the prevailing rates under general market conditions. By using “undue influence” on its appraisers, The Hartford interferes with the free market system and squeezes the body shops to the insurer’s advantage, according to the jury’s verdict.
“We are disappointed with the verdict as it relates to labor rates for auto body repair, and we will ask the court to overturn that decision,” Thomas Hambrick, a spokesman for the Hartford, said in an interview.
Hambrick said The Hartford continues to believe that Connecticut law clearly allows insurers to use in-house appraisers. The labor rates that The Hartford pays “are consistent with the market rate in Connecticut,” he said.
Attorney General Richard Blumenthal, who has pressed for strengthening laws regulating how insurance companies deal with car repairs, hailed the jury award.
“By law, appraisers should be independent—uninfluenced by insurance companies and their profits,” Blumenthal said. “A jury has agreed that the Hartford has placed undue pressure on appraisers, interfered with consumer choice on repairs and deprived consumers of independent assessments.”
In an interview with News Talk Radio 1080-WTIC, with Ray Dunaway, Bob Skrip said that “safety” was the main concern driving his association’s lawsuits against some insurers. “We're concerned about the safety of the vehicles coming out of these concierge shops,” Skrip said.
The lawsuit route is not for the timid, weak or “we want results now” body shop groups. Skrip stressed on the WTIC interview that his association has been pursuing this lawsuit since 2003. It took several years after filing to get it certified as a class action lawsuit.
David Slossberg, an attorney for ABAC, said it would now request an injunction to force The Hartford to change its practices, and may seek punitive damages. How would such a pool of money eventually be split up among the 1,500 shops Slossberg estimates could be part of the class in the case? “That's still down the road to figure out,” Skrip, one of three shop owners (along with ABAC) named as plaintiffs in the suit. “We are going to do our best to make sure that if there is a pot to pull out of, that it is distributed properly. In our opinion, the shops that decide to do all the DRP work are responsible for the suppression of labor rates. We don't want to see them get a raise because of this. If this all goes well and the labor rate is increased, it should be increased for the ones who fought the fight, not those who created the problem.” Skrip said the association and its attorneys feel the jury award gives them “a great amount of momentum” in its similar lawsuit against Progressive Insurance, and a lawsuit against a third insurer could be filed. “That may depend on the reaction out in the market," Skrip said. “We are hoping the market adjusts accordingly so we don't have to go through all this again (with a third insurer). But if we need do, we're all ready.”
The award did not appear to cover the steering of business to The Hartford's “preferred” network of body repair shops. Skrip commented about the way insurers steer customers to their preferred shops. These insurers “sugarcoat” the advantages to the claimant by using the “insurer’s choice” for body shop repair. The way they go about this is “very unfair” to say the least.
This victory has suddenly propelled ABAC into the spotlight as a role model for body shop associations all across the United States.
An internet comment posted by “Choncho” on 11/18/09 says: Congrats Repairers of Connecticut!! You are a shining example of what an Association SHOULD BE. You also have an AG that tows the line... not to mention a court system that was not bought out! How about taking your association NATIONWIDE!? Cheers to you all! Keep up the fight!
“Bodyman Jerry” wrote: This practice of doing business by the insurance companies is common [in] all states, no different in New Jersey, I have started to notice some insurance companies easing up and conceding to repairing cars properly, this doesn’t mean they are walking in and just handing it over, shops need to know when to draw a line in the sand and stand for what’s right for the customer, the shop & the insurance company, long term, not short term. We all need to start running our body shop business like a corporate business just as the insurance companies do and stand up for what right and fair, and I mean fair. We all need to become professionals earning respect; there will always be a shop willing to cut [our] throat and the insurance companies thrive on this using it to their advantage, we all need to know what’s a fair and reasonable profit, because I can tell you the insurance company knows what’s unfair and when you breach that severity line they step in and cut you back or threaten you. If you’re willing to [let them]...
Bill Denya of Denya’s Auto Body, Meriden, CT, ABAC Board of Directors member, had these comments: It’s up to the shop owners and managers in America to take a stand against any undue influence that is not in the best interest of the consumer. Congratulations to the Auto Body Association of Connecticut and their attorneys for a job well done.