Court Dismisses Auto Shops’ RICO Complaint Against Insurers

The Eleventh Circuit has affirmed the dismissal with prejudice of a putative class action brought by auto body collision repair shops against dozens of insurers and alleging RICO violations, fraud, and unjust enrichment.

The plaintiffs alleged that the defendant insurers entered into “direct repair program,” or “DRP,” agreements with some repair shops, and that those “DRP shops” agreed to “certain uniform standards and procedures” in making covered repairs to autos insured by the insurers in return for repair referrals.

The plaintiffs, all non-DRP shops, claimed that the amounts the defendants paid them for covered repairs were “artificially suppressed” because the rates were based on third-party pricing data that was itself based largely on repair work done by DRP shops contractually bound to accept lower rates.

The result, the plaintiffs claimed, was a “feedback loop” yielding artificially low “prevailing rates” cited by the defendants as the maximum they would pay.