Case Closed: Federal Court Dismisses New York Shop Owner's Case Against Insurers, TPAs
September 13, 2012

by Penny Stacey,

The U.S. District Court for the Southern District of New York has dismissed a case filed by a New York auto glass shop owner against a number of insurers and two third-party administrators alleging failure to pay assigned claims, delay in payment, fraud, deceptive acts, restraint of trade, unfair business practices and tortious interference. The suit was filed in May 2011 by David Harner, the owner of Auto Glass of Westchester Windshield Doctor in Westchester, N.Y.

The insurers and third-party administrators, respectively, named in the case, had filed two separate motions to dismiss, leading to the recent 26-page order granting the motions.

In response to Harner's allegations that the insurers have "fail[ed] to pay assigned insurance claims," U.S. judge Cathy Seibel points out that she believes the insureds did assign their rights to Harner. However, she says the claim "fails because the insurer defendants are not plausibly obligated under their contracts with the insureds to pay the insureds whatever amount plaintiff chooses to charge for the repair of the insureds' automobile glass."

"Thus, [Harner], standing in the shoes of the insureds as an assignee, may not now recover from the insurer defendants what the insureds cannot," writes Seibel.

The judge also addresses Harner's allegations regarding fraud or intentional misrepresentation, in which he identified insurer statements "to the effect that certain of their insureds are fully covered for automobile glass repair."

" … There is no inconsistency between the statements at issue-to the effect that the insured has full glass coverage-and the practice of not paying the repair shop's invoice if it exceeds reasonable commercial limits or is not submitted in accordance with reasonable administrative requirements," writes Seibel. "Plaintiff has not alleged that any insured was unable to get cost-free automobile glass service, and thus there is nothing plausibly false in the cited statements."

In Harner's allegations regarding deceptive acts or practices in the conduct of business, Harner had alleged that the insurers in question delayed or refused payment of claims or paid less than the full amount claimed, after telling the insureds that they had full glass coverage; that the TPAs had made representations to insureds that they had the authority to adjust auto glass claims, investigate, review and process claims, "despite not being licensed by New York as independent adjusters;" and that statements had been made to insureds "informing [them] that the insurer defendants would not fully reimburse for the plaintiff's services, leading the insured to not use Harner's auto glass shop.

In response, the judge writes, " … the court is not able to discern any plausibly materially misleading acts on the part of defendants. The statements made to insureds that caused them not to use the plaintiff's repair shops were not plausibly false. The true statements informed the insureds of the economic ramifications of having plaintiff perform repairs that, quite reasonably, led the insureds to take their business elsewhere."

Harner also had alleged restraint of trade practices and unfair trade practices among the TPA defendants in violation of both New York and federal anti-trust laws, and that "he was not able to charge his customary rate because the relationship among the defendants and plaintiff's competitors has resulted in a lower market rate for the services [he] offers. However, Seibel suggests that Harner's "decline in profits is simply due to the fact that he charges higher prices than his competitors, and his potential customers choose not to pay more than what their insurance companies will cover."

The complaint's final cause of action regarding tortious interference alleged that the TPAs named in the case told insureds who planned on using Harner's shop that they would not be fully covered for his services, "which caused the insureds to use shops other than [his]."
In response, Seibel writes, "Indeed, I would expect a conscientious consumer to contact his or her insurance company or its representatives to inquire whether services that the insured plans to purchase are covered under his or her insurance policy. Plaintiff contends in conclusory fashion that these communications are tortious, but provides no facts that make his claims conceivable, much less plausible."

The judge adds that she is not granting Harner leave to amend the complaint, "because such amendment would be futile."
"Plaintiff has already had the chance to amend, knowing full well what defendants' arguments would be, and knowing that chance would be his last," adds Seibel.

Among the insurers named in the original case were Allstate, GEICO, Hanover, Travelers and others, along with their TPAs, Safelite and LYNX Services. In addition, Safelite parent Belron US and LYNX parent company Pittsburgh Glass Works (PGW) were named in the original suit.


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