Collision repair shops in at least five states have now filed lawsuits against dozens of insurers, alleging the insurers use their direct repair programs to “illegally control and depress” repair rates and if the shops don’t comply, customers are steered away. They have asked the Judicial Panel on Multidistrict Litigation to approve their petition to consolidate the cases into one court.
The legal dispute 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.
John Mosley, president of the Mississippi Collision Repair Association and owner of Clinton Body Shop in Clinton, Miss., and the association’s legal counsel John Eaves have led the push for consolidation.
“We have petitioned the Judicial Panel on Multidistrict Litigation to combine our lawsuits,” says Mosley. “We expect the panel to hear our arguments in July and make a decision soon after. We hope Mississippi or Louisiana will be chosen, but it makes sense for the lawyers to work with one court, combining all the litigation and discovery.”
The United States Judicial Panel on Multidistrict Litigation (MDL Panel) was created by an Act of Congress in 1968.
“The job of the panel is to (1) determine whether civil actions pending in different federal districts involve one or more common questions of fact such that the actions should be transferred to one federal district for coordinated or consolidated pretrial proceedings; and (2) select the judge or judges and court assigned to conduct such proceedings,” according to the MDL Panel’s website.
“The purposes of this transfer or ‘centralization’ process are to avoid duplication of discovery, to prevent inconsistent pretrial rulings, and to conserve the resources of the parties, their counsel and the judiciary. Transferred actions not terminated in the transferee district are remanded to their originating transferor districts by the panel at or before the conclusion of centralized pretrial proceedings,” the site continues.
“Collision repair shops in several more states are just about ready to file,” Mosley points out.
He has been working to educate collision repair shop owners about the situation he claims the companies are facing.
“I’m not trying to make a business decision for anybody. I’m trying to explain how I, as a business owner, made the decision. [When I took legal action], I wanted to do something and stand up for myself,” he adds.
He goes on to claim “steering is a big issue.”
“They [the insurers] have the upper hand. The owner of the vehicle calls the claim into the insurance company. They might name the shop and the insurer might say the shop is not on our list. If you [the consumer] have any problems, we’re not going to pay for it. The shop might charge you more than we allow. We will guarantee the work if you go to a collision repair shop on our list. Many times we never get the call from the customer [who might have thought of our shop]. If you have a good reputation and work hard and an insurance company keeps you from getting a job you should have otherwise got … we believe this is torturous interference.”
Mosley claims filing a lawsuit was his only recourse.
“Every shop should educate the consumers that they have the right to pick. They should choose whatever avenue they prefer and can afford, such as radio, TV, billboards. Do whatever you can to get the word out that consumers have the right to do business with the shop they prefer,” Mosley says.