MABA Files Legislation To Enforce 1963 Consent Decree in Massachusetts

For Immediate Release:
March 30, 2007

Massachusetts Auto Body Association, Inc.
20 East Street, Hanover, MA 02339
(781) 826-0553 • (800) ITS-MABA • Fax (781) 826-0953
Email: mail@massautobody.org
Website: www. massautobody.org or www.itsmaba.com

For Information Contact:
Stephen Regan
MABA: 781-826-0553
Cell: 617-257-1222

The Massachusetts Auto Body Association announced that it has filed legislation that would have the effect of enforcing major provisions of the landmark federal 1963 Consent Decree within the state of Massachusetts. A state-by-state approach to codify relevant sections of the Consent Decree is unique and, in light of the unwillingness or inability of current federal officials to act, offers an alternative approach for those who have spent years trying to convince the US Department of Justice and other federal officials to enforce the agreement.

The 1963 Consent Decree was the result of an agreement between the US Department of Justice and 265 insurers affiliated with three national trade associations to settle a lawsuit brought by the DOJ, who accused the insurers of violating the Sherman (anti-trust) Act. Specifically, the lawyers for the DOJ alleged in a civil complaint that the insurers “ have engaged in a combination and conspiracy in unreasonable restraint of the aforesaid trade and commerce in the adjustment and settlement of automobile property insurance claims, the automobile material damage appraisal business and the automobile damage repair business, in violation of Sections 1 and 3 of the Sherman Act.” Further, the complaint stated, the above-mentioned “offenses” had the following “effect” on the industry:

(a) Elimination of competition in the adjustment and settlement of automobile property insurance claims, in the automobile material damage appraisal business and in the automobile material damage repair business; (b) Non-sponsored appraisers engaged in or desiring to engage in the automobile material damage appraisal business have been foreclosed from a substantial segment of the business; (c) Repair shops which refuse to accept the sponsored appraisers’ estimate have been foreclosed from a substantial segment of the automobile material damage repair business; and (d) Prices charged by repair shops have been subjected to collective control and supervision by defendants and co-conspirators.

As a result of negotiation between the parties a “Consent Decree” was entered into to avoid a trial. In the agreement the defendant insurers agreed to refrain from entering into any agreements or establishing any plan that would have the effect of appraiser or repairer steering, controlling how appraisers conduct damage reports, or controlling how repairs were made, and the prices charged for repairs or appraisals. While the agreement was clearly binding on the defendants it also stated, “The provisions of this Final Judgment shall be binding upon each defendant and upon its officers, directors, agents, servants, employees, committees, successors and assigns, and upon all other persons in active concert or participation with any defendant who shall have received actual notice of this Final Judgment by personal service or otherwise.”

For years many individuals and organizations have alleged that the defendant insurers, and many others, are in violation of the agreement, and fought tirelessly to get the DOJ to go back to court to force compliance. However, after years of collecting and forwarding thousands of pages of documents and years of meetings pleading with DOJ and Congressional officials to act on these alleged violations, little progress has been made. Unfortunately, only the DOJ, as a party to the agreement, has the “standing” to ask the court to review whether the defendants are in violation of the Consent Decree.

“Clearly, there are many obstacles to getting Consent Decree violations addressed by the federal government,” said MABA spokesman Stephen Regan. “However, that does not preclude individual states from passing laws based upon the language in the Consent Decree. Language mind you that insurers who wrote over 50% of the nations policies agreed was illegal and would not be engaged in again. A lot of individuals and organizations have been fighting for years to get these violations addressed. This is just another angle, limited to Massachusetts, to get insurers who are bound by this agreement to comply, as well as address the ogoing problem of inappropriate insurer control of the collision repair industry,” Regan added.

House Bill 1049 filed by state representative Robert Nyman, if passed, would incorporate into Massachusetts law Section Four (IV) of the agreement. Section IV of the Final Judgment, as ordered by the court, stated the insurers would not operate or participate in any plan, program or practice that recommended appraisers, steered to or away from any appraiser or repairer, control activities of appraisers, allocate customers-markets-business of appraisers, or fix, establish or control prices paid for appraisals or charged by repair shops for the repair of damage to automotive vehicles or for replacement parts or labor in connection therewith, whether by coercion, boycott or intimidation or by the use of flat rate or parts manuals or otherwise.

Following is the text of the bill or use the following link to obtain a copy http://www.mass.gov/legis/bills/house/185/ht01pdf/ht01049.pdf.:

HOUSE 1049
The Commonwealth of Massachusetts

PETITION OF:
Robert J. Nyman

In the Year Two Thousand and Seven.

AN ACT RELATIVE TO AUTOMOBILE INSURERS AND APPRAISERS.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 8G of Chapter 26 of the General Laws is here by amended by inserting at the end thereof the following paragraph:-

No insurer shall place into effect any plan, program or practice which has the purpose of effect of : (1) sponsoring, endorsing or otherwise recommending any appraiser of damage to automobile vehicles, as defined in M.G.L. 26sec 8G: (2) directing, advising or otherwise suggesting that any person or firm do business or refuse to do business with (a) any appraiser or damage to automobile vehicles with respect to the appraisal of such damage, or (b) any repair facility registered under M.G.L. 100A; (3) exercising any control over the activities of any appraiser of damage to automotive vehicles; (4) fixing, establishing, maintaining or otherwise controlling the prices to be paid for appraisal of damage to automotive vehicles, or to be charged by any repair facility registered under M.G.L. 100A for the repair of damage to automotive vehicles or for replacement parts or labor in connection therewith, whether by coercion, boycott or intimidation or by the use of flat rate or parts manuals or otherwise.

# # #