Oregon Collision Repair Shop Sues GEICO Alleging Antitrust

Lawsuit by Leif’s Auto Collision alleges GEICO and ARX shops engaged in conspiracy to suppress repair costs, refuse to reimburse for diagnostic scans. GEICO had sued collision repair facility in January alleging abusive and intimidating conduct against its adjusters.

 

Portland, Oregon-based Leif’s Auto Collision, filed a lawsuit Tuesday in the U.S. District Court in Oregon against GEICO insurance alleging the insurance company violates the Sherman Antitrust Act. The collision repair center has been involved in more than a half dozen federal lawsuits with insurance companies in the last decade, as well as a suit against the Better Business Bureau (BBB) filed last year over a poor rating the collision repairer received from the BBB.

This past January, GEICO sued Leif’s alleging abusive and intimidating conduct by employees of the repair facility against its adjusters.

In the lawsuit filed Tuesday, Leif’s alleges “GEICO has conspired with several auto collision repair shops to illegally control and depress auto collision repair costs to Leif’s detriment and GEICO’s substantial benefit.”

According to the complaint by Leif’s, GEICO coerces collision repair centers in the Portland market that participate in its Auto Repair Xpress (ARX) direct repair program to reduce repair costs in exchange for higher volumes of referrals of collision repair work. According to the complaint, “GEICO will not reimburse any auto collision repair shops for more than the maximum labor rate charged by ARX partners. This labor rate is lower than the average labor rate charged for collision repairs in the Portland, Oregon metropolitan statistical area. By threatening to punish ARX partners who charge more than the agreed maximum labor rate or spend more time on a repair and limiting reimbursements, GEICO controls the cost of repairs to GEICO policyholders’ cars.”

The complaint also states that “GEICO also refuses to reimburse any auto collision repair shop for electronic scans before and after collision repairs.” The complaint explains that several vehicle manufacturers have issued position statements outlining the need for diagnostic scans as part of the collision repair process, but that GEICO refuses to pay, “…unless a manufacturer issues an official document requiring scans for the particular make, model, and year of the cars being repaired. No such official documents exist.”

The need for diagnostic scans has been growing in the collision repair industry as more vehicles have embedded technology that must be diagnosed, calibrated or reprogrammed during the collision repair process.

The complaint alleges that GEICO and its ARX repair facilities are engaging in price fixing by establishing maximum labor rates and average hours to repair vehicles. The complaint states, “The agreements between and among GEICO and its ARX partners are specifically designed to have the anticompetitive effect of forcing Leif’s to comply with maximum-price limitations and cease providing higher quality repair options for GEICO policyholders. This is one of the classic types of group boycotts: one powerful firm threatens to withhold business or benefits from a group of competitors in order to injure a rival or disfavored firm.”

The complaint also alleges that “GEICO has knowingly made inaccurate statements about the quality of Leif’s repair services to its policyholders that have discouraged policyholders from choosing to use or continuing to use Leif’s for their collision repair needs.”

“GEICO is just the tip of the iceberg,” said Leif Hansen, owner of Leif’s Auto Collision Centers, in a press release announcing the filing of the lawsuit.  “It’s an open secret that the insurance industry is putting thousands of unsafe vehicles back on the roads every year. Vehicles we see coming to us for post-repair inspections that were fixed under GEICO’s claims scheme typically have major problems. My hope is that this lawsuit will save lives by keeping those unsafe vehicles off the streets.”

The lawsuit filed Tuesday is just the latest legal battle between the two companies. In January, GEICO sued in the U.S. District Court in Oregon against Leif’s and its owner Leif Hansen alleging that Hansen and employees of Leif’s engaged in abusive and intimidating conduct towards GEICO adjusters.

In the complaint filed by GEICO in January the insurer alleged that “…Hansen and/or other Leif’s employees routinely yell at adjusters and aggressively interrogate them with excessive questions about their personal lives and personal information.”

GEICO also alleged that Leif’s employees obstruct adjusters who arrived at the facility to examine vehicles refusing to let them see vehicles, restricting the days and times adjusters can visit and other activities. According to the complaint, “In one instance, Leif’s prohibited a GEICO adjuster from entering the office or speaking to any Leif’s employees. Leif’s forced the adjuster to conduct business through two boxes mounted on the exterior door of the shop. Leif’s would decide which vehicle to drive out and the adjuster would write the estimate and submit it to the Inbox, and Leif’s staff would review and place it in the Outbox.”

That lawsuit is still pending.

Beyond, GEICO, Leif’s has filed lawsuits against numerous other insurers in federal court since at least 2006 including Progressive, Allstate, AIG, American Family State Farm and others.

Last year, Leif’s filed a lawsuit in Multnomah County Circuit Court against the Better Business Bureau that sought $5 million and accused the BBB of defamation and interfering with its business. The suit came after the BBB gave the collision repair center an “F” rating following consumer complaints that the collision repair center did not follow up on with the bureau. That suit was dismissed by a judge earlier this year.