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Farmers Wins Landmark Body Shop Fraud Lawsuit

LOS ANGELES--Following a jury trial, a Los Angeles judge has signed a $163,387 jury award to Farmers Insurance Exchange in a body shop fraud lawsuit involving a body shop and its owner. Future hearings are scheduled and the total monetary award is expected to double. The Court also issued an injunction prohibiting the body shop, Hollywood Auto Collision and its president Sean Kim, from submitting any further false claims to Farmers.

This was the first such body shop fraud case tried under a 1993 state law designed to augment law enforcement’s efforts to prosecute defrauders. Farmers has filed a number of similar lawsuits under this statute, emphasizing its zero tolerance for insurance fraud.

“We owe it to our policy holders to fight insurance fraud,” said Doug Ashbridge, Farmers’ Director of Special Investigations. “We are happy to be on the front line in the war against insurance fraud and are equally excited to be the first insurance company to prevail against a body shop under this law. This type of insurance fraud is not fair to our insureds and if not stopped, drives up insurance rates for consumers. Hardworking, honest people should not have to pay for the actions of a few dishonest people. That is why Farmers will use every legal means at its disposal to help stop any type of insurance fraud,” he added.

The jury specifically found that the defendants knowingly billed Farmers with charges for repairs and part replacements that were not actually performed. The jury also found that the defendants improperly waived insurance deductibles under circumstances where defendants did not repair the vehicle in accordance with the amount of the repair claim accepted by Farmers.

Following the trial, the judge signed a judgment which included an injunction specifically prohibiting the defendants from any of the following improper activities: Submitting false claims; improperly waiving insured deductibles; failing to obtain customer authorization before changing the method of vehicle repair; and submitting untrue or misleading statements to Farmers. The judge also ordered the defendants to comply with laws regarding estimates and authorization requirements.

Mr. Ashbridge further stated: “We expect honesty and integrity from those who render services to our policyholders. When we develop concrete evidence that intentionally false claims have been filed, we take swift action against the unscrupulous individuals. Body shops cannot bill Farmers, accept money for the parts and services, fail to install the parts or render the services, and then simply pocket the money. It is wrong; it is fraud. The jury heard the overwhelming evidence and agreed.”

Farmers has developed a nationwide team that is designed to detect precisely this type of fraudulent activity. Their investigators’ efforts and expertise exposed the fraud being perpetrated and developed the physical evidence of fraud. Lawsuits such as this are part of a nationwide commitment to stem the tide of insurance fraud.

Farmers was represented at trial by Dennis B. Kass and Evelina Serafini of Manning & Marder, Kass, Ellrod, Ramirez, LLP.