Montana has fined a subsidiary of insurance giant QBE following what the state indicated were both improper and sloppy steering practices. How sloppy? Unigard, according to…
Florida collision repairer attorneys Wednesday offered a cutting rebuttal to insurers’ most recent attempts to dismiss an antitrust case serving as a model for more than two dozen others across the country.
The case alleges insurers are working together to drive down collision repair labor rates, refusing to pay for the necessary labor to restore policyholders’ cars and “steering” customers away from certain auto shops.
A&E Body Shop Inc. et al v. 21st Century Centennial Insurance Company et al is part of a multidistrict litigation — in which multiple similar federal districts’ cases are heard in the same venue to eliminate what would be a lot of costly legal redundancy.
Middle District of Florida Judge Gregory Presnell is hearing all of the cases, and applying Florida law to every case — many of which are being handled by Jackson, Miss.-based Eaves Law Firm, unless a defendant or plaintiff can show how their state law differs.
Unlike an earlier version disparaged by a judge and insurers as lacking specifics, a revised lawsuit filed in February by the Florida shops is full of examples of what it called price-fixing and steering by the nation’s biggest insurers. Read more analysis of it here.
The amended complaint depicts an auto insurance industry which forces “a race to the bottom” in quality within an auto body repair industry dependent on its business.
The new response Wednesday attempts through a variety of rebuttals to eliminate any reason why the lawsuit can’t advance to the discovery stage, when the auto body shops can access internal insurer files to bolster the case. (And that should be fun.) The plaintiffs also have floated the idea of amending their lawsuit itself and received a Friday deadline for that.
DRPs a ‘weapon’
The collision repairers on Wednesday further clarified something previously challenged by the court and insurers: A lack of detail about which shops are in direct repair programs and which are allegedly just forced to accept direct repair terms. On Wednesday, they argued that the point was more about what DRPs have helped insurers do to the collision repair industry.
“To use a metaphor, DRPs are not the crime, they are one of the weapons in Defendants’ arsenal,” the shops said in their response.
The DRPs are relevant because insurers who supposedly aren’t colluding somehow seem to know what each other mandates in DRPs and attempt to enforce those terms on collision repairers, the plaintiffs say.
“Defendants continued arguments on this point appear to merely disagree with the Court’s prior order, a position which they had every opportunity to explore via a motion to reconsider which was never filed,” the shops said in the new case. “Arguments inferring the Court simply got it wrong are without legal merit.”
If you’re suing parties for an antitrust violation, you need more than some similarities for a court to decide it deserves a closer look and let the case proceed. The Supreme Court calls these “plus factors,” and they and other courts have suggested they include controlling a large part of the market, doing something that seems against your self-interest, behavior that is just so similar or simultaneous that it can’t just be coincidence, a reason to conspire and a chance to share information.
The shops reiterate some of their new arguments that reinforce all of these, including the obvious points of market share (90 percent of the private auto insurance market in Florida), motive (profit in the billions) and opportunity to conspire (trade associations)
They also point out the improbability of a bunch of insurers doing exactly the same thing at the same time across a state the size of Florida.
“As set out in the SAC, the statistical likelihood of the Defendants each independently arriving at the same labor rates is likely astronomical, particularly where, as here, the rates bear no connection to real rates as publicly posted by the Plaintiffs and there is no variability across the entire state, again, in contradiction of rates publicly posted by the Plaintiffs,” the response states.
Also, the insurers all say they won’t pay for the same procedures and give the same reason though “the databases they each utilize contradicts their expressed rationales,” according to the response.
The shops also make the case that even though insurers stand to save a lot of money through their actions, it never would have worked if it weren’t industrywide.
“If only a single Defendant took the position that underpaying for repairs, compelling use of substandard and/or dangerous replacement parts, failing and refusing to pay for repairs that will return a vehicle to pre-accident condition and similar actions, that Defendant would find itself losing customers for insurers who do pay for full and proper repairs utilizing safe and appropriate parts,” the response states.
Right to refuse
Another aspect of the insurers’ motion and the plaintiffs’ counterargument points out the messy question inherent to insurance: Who’s the customer when someone else is picking up the bill?
Insurers have said they have the right to refuse to pay body shops without running afoul of the law, but the collision repairers hold that it just isn’t their place to do so.
“The choice of repair facility belongs to the consumer,” the new filing states. “The obligation and duty to pay for those repairs is not elective for the Defendants; they are not free to choose to which vehicles they will repair unless the vehicle meets the statutory definition of a total loss.
Second, The Defendants here are not the sellers, they are the payers and only the payers. Under other circumstances, a seller may refuse to sell at a particular price, and a buyer may shop around for a better deal. The Defendants are neither buyers nor sellers; their only obligation and concomitant right is to pay for repairs.”
Don’t take insurers off case
Some insurers said they aren’t mentioned very much in the lawsuit and should therefore not be included in the case. But since they don’t make more of a case for exclusion than that, the shops’ attorneys wrote, they shouldn’t be allowed to depart.
“Beyond this, however, as noted above, the vast bulk of evidence proving the violations of federal law is within the possession and control of the Defendants. The (complaint) alleges more than sufficient facts, taken as a whole, to establish a reasonable probability of agreement in violation of the Sherman Act. That Plaintiffs presently know more details about some Defendants’ illegal acts than others, does not excuse the acts of those who have been more successful at hiding their misdeeds.”
One of the difficulties in the Florida and other states’ cases against insurers has involved convincing the court that “quantum meruit” — benefitting someone without getting paid for it — counted here.
The shops had argued that by making the repairs for the insurers’ clients at the prices insurers had allegedly fixed lower than they should have been, they were benefiting the insurers.
Presnell has disagreed, citing Florida case law that indicates the benefit provided is to the driver whose vehicle was fixed — not to the insurer who paid the bill. He also wrote that the insurers keeping the money that the allegedly unfair prices allowed them to save didn’t count as a benefit — they’d have to get a benefit, then keep the money.
Though Presnell expressed skepticism this charge could make it to trial, the shops tried again, citing a quantum meruit case involving a different middleman and arguing:
To that extent, it is indisputable that the Defendant insurers are paid monies in the form of premiums by their respective insureds; their respective insureds pay said monies to the Defendant insureds in exchange for Defendant insureds agreeing, inter alia and in general, to repair –OR- pay for the repair of the respective insureds’ damaged vehicles; the Defendant insureds are then contractually obligated to repair –OR- pay for the repair of their respective insureds’ vehicles; the Plaintiff shops are the entities that repair the vehicles for the insureds of Defendants; thus, and clearly, Plaintiff shops benefit Defendants by providing them with the needed opportunity to fulfill, and not otherwise be in breach of, Defendants’ respective contractual obligation to have their respective insureds’ vehicles repaired (and without this benefit of the Plaintiff shops, this contractual obligation cannot be fulfilled by the Defendants and Defendants would not be paid the premiums they are paid by their respective insureds; the Defendants need the Plaintiffs); the Defendants obviously possess knowledge of this benefit and have accepted and retained the benefit of the repairs that are conferred to each of them via their respective relationships, contracts and paid premiums with and from their insureds.
They also make this impassioned common-sense argument which counters an insurer position that was particularly successful in Mississippi (which prefers contracts, not courts, settle billing disputes):
The only other argument made by the Defendants for dismissal of the Quantum Meruit claim appears to be, in summary, the following: that since Plaintiffs have known at different times the limitations of payment for repairs that are/were self-imposed by the Defendants upon the Plaintiffs before Plaintiffs did repairs, that therefore the Plaintiffs have no legal right to any greater or full payment or compensation for their work. This argument, however, is disingenuous and borders on the ridiculous: other than the wrongful “steering” engaged in by the Defendants, the fact that the Defendants have refused to rightfully pay and/or compensate Plaintiffs over many, many years and in such an egregious and extensive manner IS, “when the rubber hits the road”, the very essence of this case.
That is the ultimate question posed and which is before this Court: under the applicable law, did the Defendants commit a wrong by, inter alia, failing and refusing to pay more than what they are/were willing to pay Plaintiffs for the repair work the Plaintiffs provide(d) and which full and greater pay the Plaintiffs reasonably expect(ed) pursuant to, inter alia, the law? (Of course, the Plaintiffs are confident under these circumstances that the answer is a resounding, “YES”.) To effectively argue that since we told you we were going to “wrong you” and you knew we “wronged you”, therefore you cannot seek justice for the wrongs committed — that, either you take what we are willing to give you so you can make at least SOME money to stay in business or don’t repair the vehicle for your customer at all, is, at a minimum, unwarrantedly and inexplicably audacious. Such argument on the part of the Defendants, of course, has no merit.
Featured image: The scales of justice atop the Old Bailey in England. (Anthony Baggett/iStock/Thinkstock)