The Rhode Island Supreme Court has decided to hear the Property Casualty Insurers Association of America’s (PCI) appeal of a case decided by the Superior Court that would require insurers to use data from labor rate surveys as the sole determinant of the prevailing auto body labor rate. The Supreme Court also moved to stay the lower court’s decision.
The state’s labor rate survey statute requires that insurers with more than 1 percent of the market use a standardized form to survey independent body shop labor rates. DRP shops don’t participate in the surveys.
The case, Auto Body Association of Rhode Island (ABARI) vs. State of Rhode Island Department of Business Regulation, arose from the department’s interpretation of the statute that the labor rate survey is not the sole determinant of the prevailing labor rate; instead, it’s only one factor that insurers are to consider in determining the rate.
ABARI appealed the Department of Business Regulation’s decision to the Superior Court, and PCI made a filing in the case asking the court to affirm the department’s decision. The Superior Court judge ruled in favor of ABARI in August, and the group called the decision “a victory for the industry.” Both the Department of Business Regulation and PCI subsequently filed appeals to the Supreme Court. Now, the Supreme Court has consolidated the appeals and will hear the case.
“The previous ruling removed any checks and balances regarding the establishment of a reasonable labor rate, opening the door to drivers and insurers being socked with inflated auto body repair labor rates and ultimately higher repair costs,” said Frank O’Brien, vice president and regional manager for PCI. “ABARI wants to circumvent the role of competition in setting prices and force insurers to pay whatever amount is reported to them in the auto body labor rate survey. We want to make sound decisions about repair claims and take into account the many factors that should be included in determining a fair labor rate.”
For more information about ABARI, visit www.autobodyassociationri.com.