On February 24, a group of Florida auto body shops filed an antitrust action against over forty property & casualty insurers in the United States District Court for the Middle District of Florida.
In the case, styled A&E Auto Body v. 21st Century Centennial Insurance Co., d/b/a Farmers Insurance Group et al., the plaintiffs allege that State Farm's vendor agreement requires shops desiring to participate in tis preferred provider program to accept the "market rate" for such services, and that State Farm calculates those rates in an improper manner that keeps them artificially low and not representative of the true "market" for such services. The plaintiffs also alleges that the remaining insurer defendants in the state have advised plaintiffs that they will pay no more than State Farm pays for labor at their shops, thus resulting in a stabilizing of rates at these allegedly low levels.
In addition to a number of common law counts, plaintiffs assert that defendants' conduct constitutes price fixing under Section 1 of the Sherman Act. In search of evidence of "agreement" amongst the defendants (a necessary element of a Section 1 claim), plaintiffs allege that the insurers agreed to control and suppress automobile damage repair costs at meetings "amongst themselves" that they "refused to allow members of the auto collision repair industry to attend." Plaintiffs also contend that defendants' allege conduct constitutes unlawful "boycott" activity. In support of that assertion, plaintiffs maintain that defendants' alleged acts of "steering customers away from plaintiffs, through allegations and intimidations of poor work quality" places defendants' conduct beyond the limited antitrust exemption that the insurance industry enjoys under the McCarran Ferguson Act.
The action is only in its very earliest stages, and the insurers have not yet responded to plaintiffs' allegations. However, given the number of insurer defendants, and the nature of the issues, the case is clearly "one to watch" going forward into 2014.
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