Connecticut Supreme Court Reverses $35 Million Judgment Against Insurer

ConnSupremeCourtThe Connecticut Supreme Court has overturned a lower court’s judgment against Hartford for $35 million. Approximately 1,000 state auto collision repair companies had alleged the insurer violated Connecticut’s Unfair Trade Practices Act (CUTPA) by working to establish “price fixing” or artificially low labor rates.

Plaintiffs filed the class-action lawsuit in 2003 alleging that Hartford had “unfairly” lowered prices in two ways: by “suppressing” the hourly labor rate paid to independent body shops through its supervision of its employee-appraisers and “unfairly steering” its insureds to its preferred-provider direct repair program shops.

The jury decision for this case came in November 2009 with a $14.7 million judgment against the defendant. The jury returned a verdict that rejected plaintiffs’ steering claim, according to Hartford’s attorneys. Stamford, Conn., Superior Court Judge Alfred Jennings added $20 million in punitive damages in June 2013. Hartford appealed the verdict.

“[I]nsurance companies in this state have the right to negotiate the hourly labor rates that they are willing to pay for auto body shop repairs and to refuse to give their business to an auto body repair shop with which they are unable to agree on such a rate,” the Connecticut Supreme Court judges write.

“They are also entitled … to employ appraisers to negotiate the labor rate for such repairs on their behalf,” the court adds. “Notably, the plaintiffs do not claim otherwise. In such circumstances, it would be an anomalous result, to say the least, if we were to endorse the position of the plaintiffs that every time an insurance company exercises its right to negotiate with an auto body repair shop for an hourly labor rate, and then proceeds to have its appraisers estimate the cost of repairing its insureds’ vehicles on the basis of that agreed on rate, it is somehow committing an unfair trade practice under CUTPA.”

The court points out that the appraiser does not have the authority, pursuant to his or her license, to establish a labor rate for auto body repair work.

“Appraisers do not have particular expertise in the economics and development of labor rates, and those matters are not a part of their licensing qualification,” according to court documents that cite a letter from state attorney general Richard Blumenthal to insurance commissioner Thomas Sullivan dated August 27, 2007.

The Connecticut Supreme Court remanded the case back to the lower court with the direction to “render a judgment for the defendant.”

To read the Connecticut Supreme Court’s decision, click here.

This entry was posted in glassBYTEs Original Story and tagged , , , , , , , , , . Bookmark the permalink.

1 Response to Connecticut Supreme Court Reverses $35 Million Judgment Against Insurer

  1. Daveycrewcut says:

    OMG! Sometimes I really wonder about our legal system. Will someone please make our courts and government regulators understand that insurers aren’t as noble as they would have one believe. They are in business to make profits. They write the contracts. They set the premiums. They apparently also get to guarantee themselves profits at the expense of service providers.

    For over twenty years just prior to 1963, they terribly abused their positions and were called onto the proverbial carpet by then attorney general, Bobby Kennedy. Rather than fight, the insurers punted and “consented” to the Federal Judge’s Decree. Most of the insurers then proceeded to thumb their noses at the order and went on abusing their authority as they still do today with seeming impunity. Since 1963, there have been laws, regulations and rules ad nauseum proposed and passed to attempt to rein in the insurers.
    Most, if not all, States in the US have passed laws guaranteeing the buying public’s right to freely choose what repair facility gets to work on their vehicles even if the repairs are to be paid with insurance claim proceeds.

    Insurance companies know that. They still sell their property damage coverage policies all the while knowing that their policyholders do not, by law, have to frequent repair facilities with whom they have negotiated pricing. Auto repair facility owners have no legal obligation to “negotiate” pricing with insurers any more than the man in the moon!

    If state law says the policyholder gets to pick the service provider, then the insurers know that they cannot write into their policies that policyholders must frequent repair facilities with whom they have contracts. The real “preferred provider” is the one chosen by the policyholder even if that provider charges full retail prices. The insurer knew that was a real possibility even before the policy was written and sold to the policyholder, and in fact, built that likelihood into the cost of the policy when the premium was set. In other words, the premium paid by the policyholder (consumer) to the insurer was enough to pay the service provider full retail prices for services rendered! Anytime an insurer short pays a full retail invoice, they know the “odds” as to whether the repair facility will fight for the balance. If the repair shop relents, the insurer makes more profit at the expense of the service provider, not the consumer.

    When it comes to auto glass claims, the insurer built into the premium full retail costs for glass repairs and then suggests that the service provider should guarantee their profits by only charging them what they paid twenty years ago! How presumptuous! Insurers suggest, even though we too are in business to make a profit, that we consider turning away our customers if we will not accept their low ball offers. How presumptuous! The insurer will even go so far as to suggest that we should make our customers, that have already paid their premiums, pay us the difference in what we charge and what their insurer would like to pay! Now who is really putting the screws to the consumer?

Leave a Reply

Your email address will not be published. Required fields are marked *