Wisconsin Body Shops Might Seek up to $1 Million in Damages from State Farm in DRP Labor-Rate Lawsuit

Wisconsin Body Shops Might Seek up to $1 Million in Damages from State Farm in DRP Labor-Rate Lawsuit

Pulera Collision, Armando’s Collision Center and Jay-Bee Collision Repair Center filed the lawsuit in June 2016, alleging that State Farm drove them from its Select Service network when the insurer lowered their hourly labor rate from $56 to $50 in 2015.

State Farm

Three Kenosha, Wis., collision repairers suing State Farm for allegedly grouping them into the Chicago market to lower their hourly labor rate could seek up to $1 million in damages, their attorney told BodyShop Business.

Pulera Collision, Armando’s Collision Center and Jay-Bee Collision Repair Center filed the lawsuit in June 2016, alleging that State Farm drove them from its Select Service network when the insurer lowered their hourly labor rate from $56 to $50 in 2015.

State Farm then steered consumers away from the three shops when the repairers left the program, the shops contend.

Attorney David Novoselsky, who represents the shops, said they’re in the process of estimating how much business the repairers have lost as a result of State Farm’s alleged actions.

“I would think each shop has lost several hundred [thousand dollars],” Novoselsky told BodyShop Business. “The total may reach or exceed $1 million.”

After dismissing the lawsuit twice, the 19th Judicial Circuit Court of Lake County, Ill., on June 9 agreed to move forward with two counts from the original complaint: breach of contract and tortious interference.

The latter count refers to State Farm allegedly steering consumers away from the three collision repairers.

“It’s saying that we’re losing customers because they’re being told they have to go to a preferred provider rather than us,” Novoselsky explained. “It’s also a factor of the shops charging a higher rate [than Select Service shops], even though in reality they’re just charging the same rate that they were before, but [State Farm] is telling people to go to a network shop or they won’t cover the difference.”

Overcoming State Farm’s efforts to convince the court to dismiss the lawsuit “is the first big hurdle” in the case, Novoselsky said. Now that the shops have proven that there’s a legal cause of action to proceed with the case, they have to provide evidence to prove that their claims are true.

In the June 9 hearing, Judge Luis Berrones seemed skeptical, although he agreed to allow the lawsuit to proceed on the aforementioned two counts.

“I think ultimately it sounds like a difficult case to prove, but I don’t know how the evidence is going to come out,” Berrones said.

A status hearing for the case is scheduled for Nov. 17, according to the clerk of court’s website.

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