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Insurance Companies Manipulate Repair Costs Says Shop-Sponsored Complaint in Mississippi Court A host of body shops has alleged in Mississippi federal court that a group of insurance providers, including State Farm Mutual Automobile Insurance Co. and GEICO General Insurance Co., of conspiring to manipulate car repair costs in order to reduce their payments. The complaint was filed in the U.S. District Court for the Southern District of Mississippi, Northern Division-Jackson. Defendants named included: State Farm; Progressive; Allstate; Nationwide; GEICO; United Services Automobile Association; USAA; Safeco; Shelter Mutual Insur-
ance Co.; Direct General Insurance Company of Mississippi; Mississippi Farm Bureau; and Shelter General Insurance Co. The repair shops are represented by John Arthur Eaves Jr. of John Arthur Eaves Attorneys At Law in Jackson, MS. The suit named 16 separate insurance firms as defendants, but repeatedly alleges that State Farm largely orchestrated the scheme, which the body shops said involves the artificial suppression labor, repair and material costs and the enactment See Insurers Sued, Page 4
Hickory, NC’s K&M Collision Files Suit in Six New Shortpay Cases
See Six New Shortpays, Page 22
P.O. BOX 1516, CARLSBAD, CA 92018
As previously reported in Autobody News, last November 27, Michael Bradshaw, VP of Operations at K&M Collision in Hickory, NC, filed six shortpay lawsuits on his customers’ behalf. Of the six cases filed, three were against GEICO, two were against Nationwide, and one against Allstate, with amounts ranging from $680.95 to $5749.64. Some of the claims included in the lawsuits were Breach of Contract, Bad Faith, and Unfair/Deceptive Trade Practices. K&M Collision was represented by attorney William E. Morgan of
Morgan Law PLLC in Hickory, NC. According to Bradshaw, “These claims stem from the insurers’ continual refusal to pay for factory correct repairs according to manufacturer repair specifications and guidelines. Not all insurers are bad; what we’re finding is that many of these companies are doing the right thing and paying for manufacturer correct repairs; however, there is a select group of insurance companies that show complete disregard for manufacturer specified repairs, procedures and safety checks on a consistent basis. Unfortunately, those insurers put us in the position of
Change Service Requested
by Chasidy Rae Sisk
VOL. 4 ISSUE 12 FEBRUARY 2014
Industry Observations from Collision Attorney
ERICA EVERSMAN If you’ve been paying the least bit of attention to legal issues in the collision repair industry over the past decade, you probably know of Erica Eversman, an OH-based attorney and consumer advocate who specializes in understanding collision repairers’ issues and their impact on consumer safety. A noted authority and frequent speaker on the topics of diminished value, DRP networks and the influence insurers attempt to exert over repairers, Eversman serves as a consultant to the industry, assisting repairers to analyze proposed regulations and laws affecting collision repair. In addition to creating “AutoMuse”, an award-winning blog, she is chief counsel for Vehicle Information Services, Inc. and the founder of the Automotive Education and Policy Institute, a non-profit organization geared towards educating consumers. Though Eversman is obviously busy playing so many roles, she took time from her hectic schedule to talk to Autobody News readers about some of the major concerns plaguing the collision repair industry today. As a consumer advocate, Eversman stresses that consumer education is vital; “first and foremost, consumers are the people in charge of their vehicles, but if they don’t have the proper information, they can’t stand up for themselves. They are the only ones who can effect meaningful change because it is their vehicles and their contract with the insurance company.” Furthermore, collision repairers must comply with consumer protection laws, so they are the ones at risk of noncompliance when insurer interference promotes a situation where repairers are asked to do as the insurer requests, which is always focused on cost and saving money rather than on providing a quality repair. The shop can only do so much, and if the consumer doesn’t help, they are essentially saying that the repair is good enough, even if it’s not actually safe.
INTERVIEW by Chasidy Rae Sisk
continued on page 24
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