US court’s $15 million award to bodyshops in verdict against insurer

A Connecticut jury in the US awarded $15 million in damages to a group of auto body repairers led by the Auto Body Association of Connecticut (ABAC) after determining that The Hartford Insurance Co. committed unfair business practices to suppress labour rates.

The class action lawsuit filed by the ABAC and three of its members alleged that the insurance company engaged in a pattern of unfair practices that violated Connecticut law.

In November 2009, the jury found that The Hartford artificially suppressed body shop labour rates by not allowing appraisers to conduct independent appraisals. The jury agreed that The Hartford improperly forced independent auto body shops to accept lower labour rates than general market conditions would otherwise allow by relying exclusively on its own service representatives to perform appraisals so the company could control the appraisals including labour rates.

The case was heard in Stamford Superior Court by Judge Alfred J. Jennings Jr.

Attorney David Slossberg of Hurwitz Sagarin Slossberg and Knuff of Milford said the plaintiffs will now ask the judge to award punitive damages and attorneys’ fees over and above the $15 million jury award. He also said they will seek injunctive relief which is a court order to force The Hartford to change its business practices.

“The next step is to ask the court for immediate injunctive relief.” He declined to give details on what form of injunctive relief they will seek from the judge,” he said.

“That’s what this case is really about: the injunctive relief,” said Slossberg, commenting on the verdict.

“We knew we would have to go to trial with this case because it was never about the monetary award. That’s why I said we were gratified by the money award but for our guys we want to change how they do business.”

One of the allegations and the evidence showed that the whole mechanism of suppressing labour rates involves them directing work to their smaller network of direct repair shops and getting concessions from those shops. Then they send appraisers into the independent shops and use the concessions they got from the DRP shops as a hammer to force the independent shops to work at the lower labour rate Slossberg explained.

When asked about how this decision may affect other insurance company practices, Slossberg said, “I believe this is the first verdict of its kind in this industry. I think this is a situation that other insures are paying attention to. They need to be paying attention to this verdict. The verdict is saying that insurers that use their DRP and their appraisers to suppress and deprive auto body shops from receiving a fair labour rate are committing an unfair trade practice.

“And there are a lot of states that have unfair trade practice laws that are very similar to Connecticut.

“If a company is doing business in 50 states and in 35 of them there are similar laws then if you are the insurance company I would assume that this is something you would certainly have to take into consideration.
The Auto Body Association of Connecticut filed the original lawsuit in 2003.

Thomas Hambrick, company spokesman for The Hartford, told the Connecticut Law Tribune that his company plans to appeal the verdict. “We remain confident that our auto body repair program is fully consistent with Connecticut law and provides outstanding service to our customers.”

Slossberg is more confident. “I think it is unlikely the Connecticut Supreme Court would overturn this verdict. Ultimately we will be vindicated,” he concluded.

Source: Collision Week