Allstate Faces $5,000 Fine for Charges Related to Steering in Rhode Island Body Shop Case; Decision Defines What Constitutes "Interfering" with Consumer Choice
December 9, 2009

Allstate Insurance Co. has been fined $5,000 for "interfering with [a] consumer's free choice of repair facility" in a case involving a Rhode Island body shop, according to a decision released by the state's Department of Business Regulation's Insurance Division. The company is charged with "failure to affirmatively inform a claimant of his right to select the auto body shop of his choice;" and interfering with the claimant's choice of shop.

The fine came about as the result of a complaint filed by Providence Auto Body on behalf of a customer, Dennis D'Ambra, against Allstate Insurance Co. The company argued that Allstate interfered with D'Ambra's choice of repair facility following a claim in which he was involved, and thereby attempted to steer him to a direct-repair facility. A hearing was held earlier this year in the case, and the decision was recently released.

In the initial complaint, Providence claimed that D'Ambra initially contacted the company to have his vehicle repaired, after being involved in an accident with an Allstate insured who had accepted liability for the accident, and that Providence then contacted Allstate. One week after Providence called Allstate, the insurer's CSR, Darlene Sczygiel, who was handling the claim, contacted D'Ambra and did not mention her contact with Providence, according to the state's decision. D'Ambra says that when he advised Sczygiel that he wanted to take his car to Providence, Sczygiel placed him on told "to see if they [were] one of [the company's] approved shops."

Though Sczygiel denied using the word "approved," she told the court that she advised D'Ambra that Providence was not a direct-repair shop, and then, despite his request to have the vehicle also appraised at Providence, "indicated to him that it would be more expedient to have the appraisal conducted at a drive-in call center," according to the state's decision.

According to the Department of Business Regulation, Allstate claimed that since the CSR did not specifically suggest another shop, she did not breech the state's insurance code, which says "Once the insured or claimant has advised the insurer that an auto body repair shop has been selected, the insurer may not recommend that a different auto body repair shop be selected to repair the automobile."

However, the state points out that another provision in its insurance code prohibits insurers from "interfering with the insured's or claimant's free choice of a repair facility."

"The question for decision, therefore, is whether Allstate 'interfered' with D'Ambra's free choice of auto body shop," writes the officer who heard the case, Elizabeth Kelleher Dwyer, Esq.

After reviewing several definitions of the word "interfere," Dwyer concluded as follows: "The intent of the legislature is that insurers do not undertake actions that hamper repair by the shop of the customer's choice. In other words, without a legitimate business reason, an insurer may not take actions which make it more difficult to have the repair done at an auto body shop with whom the insurer does not have a contractual relationship."

The state rules that, according to the testimonies provided in the case by both D'Ambra and Sczygiel, she continued to suggest that he bring the vehicle to an Allstate drive-in claim center for appraisal, even after he'd advised he wished to take the vehicle to Providence, and only after rebuffing this suggestion did she agree to contact his preferred shop.

"The choice of an auto body shop is the customer's," writes Dwyer. "This decision should not be interpreted to keep information from a consumer. This means that discussion of an insurer's drive-in claim center and/or a direct repair program is not in and of itself an indication of steering. However, when the customer indicates that he does not need or want that information, as D'Ambra did here, the conversation must stop."

In addition, the state department ruled that Allstate also interfered with D'Ambra's decision to have his vehicle repaired at Providence by placing him on hold while she checked the direct-repair list, "when she had plenty of time to make that determination before making the call," advising D'Ambra the shop was not approved without explanation, and delaying the appraisal for 15 days after making contact with D'Ambra.

"These actions taken together constitute 'interfering' with the claimant's free choice of repair facility … ," adds Dwyer.

In addition to the $5,000 fine faced by Allstate, the Department of Business Regulation has mandated that Allstate also "cease and desist from engaging in any activities" that violate the state's insurance code.

CLICK HERE for full text of decision.

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