State Farm’s attorneys deny the company has violated antitrust laws in their court response to a group of Florida collision shops which filed a lawsuit alleging State Farm (and dozens of other insurers) use a direct repair program to “illegally control and depress” repair rates and if the shops don’t comply, customers are steered away. This case has potential implications for the AGRR industry, as independent automotive glass repair shops allege similar issues with third-party administrators (TPAs), which handle automotive glass claims for insurers.
“State Farm denies that State Farm committed or is liable in any manner, including, but not limited to, for any tort or wrongful act. State Farm further denies that the plaintiffs are entitled to any relief in this action from State Farm, either at law or in equity,” the company’s attorney claim in court documents filed in the U.S. Middle District of Florida Court, Orlando Division.
“State Farm prays that the complaint be dismissed with prejudice, and that State Farm’s costs and expenses of litigation, including attorneys’ fees, be assessed against the plaintiffs,” the attorneys add.
The company denies that its “Select Service Program” is a direct repair program, as alleged by the repair shops.
“State Farm admits it maintains an Internet-based business-to-business or B2B portal and that it affords certain body shops use of that portal for submission of prevailing market rate survey data. State Farm further admits that its B2B portal supplanted a previously paper-based prevailing market rate survey method,” the company’s attorneys write.
“[S]tate Farm admits that its survey is designed to identify rates that are representative of shops participating in State Farm’s survey in a given geographical area,” they add.
“State Farm admits that it uses a survey via its B2B website as a method to determine the PCP. The PCP that is developed is keyed to each geographical area. State Farm admits the survey solicits certain labor rate information from body shops that are qualified to submit survey responses,” according to the court documents.
In response to allegations of price fixing, the company’s attorneys claim, “[S]tate Farm admits the law speaks for itself and that State Farm acts and has acted lawfully.”
The Florida repair shops had claimed, “Over the course of several years, the defendants have engaged in an ongoing, concerted and intentional course of action and conduct with State Farm acting as the spearhead to improperly and illegally control and depress automobile damage repair costs to the detriment of the plaintiffs and the substantial profit of the defendants.”
The Florida repair shops filed the complaint in late February.
“Defendants, particularly State Farm, have engaged in an ongoing pattern and practice of coercion and implied threats to the pecuniary health of the individual plaintiff business in order to force compliance with unreasonable and onerous concessions,” according to court documents.
“Failure to comply results in removal from the [direct repair agreement] programs, combined with improper ‘steering’ of customers away from the plaintiffs’ businesses, simply punishment to decrease the number of customers utilizing the plaintiffs’ services, and/or increasing ongoing and improper refusals to pay for certain repair procedures and/or charges without valid or reasonable justification.”
In a separate filing, State Farm asks the court for a judgment on the pleadings.
“State Farm Mutual Automobile Insurance Co. (State Farm) hereby moves for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). Plaintiffs’ complaint asserts state law and federal antitrust claims, all of which are deficient as a matter of law because plaintiffs’ allegations do not support essential elements of those claims,” the company’s attorneys claim.
Geico is the only other insurer to have responded to the complaint at press time.
“Defendant, Geico General Insurance Company (Geico), moves to dismiss plaintiffs’ complaint and demand for jury trail for failure to state a claim upon which relief can be granted …” the company’s attorneys claim.
The judge has not issued any decisions at press time.
For a full copy of State Farm’s response, click here.
For a copy of State Farm’s motion for judgment, click here.
Got a copy of Geico’s full response, click here.
Full a full copy of the repair shops’ complaint, click here.