The original case involved a plaintiff, Steven Bellshaw, who alleged a notice issued by Farmers about their auto repair shop options did not include all of the information required by state law. (Credit: majivecka/Adobe Stock)
The Supreme Court of Oregon has reversed a $26.3 million class action ruling against Farmers Insurance Co. of Oregon.
The original case involved a plaintiff, Steven Bellshaw, who alleged a notice issued by Farmers about their auto repair shop options did not include all of the information required by state law. Oregon’s “choice-of-shop” statute (ORS 746.290(2)) bars insurers from requiring that policyholders use certain repair shops as part of a claim settlement.
The statute, which took effect in December 1977, requires adjusters who are establishing loss under a motor vehicle policy to advise their insureds of the provisions of another state law, ORS 746.280, which lays out the manner in which insurers are allowed to communicate repair shop recommendations to claimants. The language used to communicate this must be "clear and conspicuous" and approved by the Director of Consumer and Business Services (DCBS).
In addition to banning insurers from requiring the use of certain repair shops, the law requires the adjuster to inform the insured of the rights conferred within this statute by providing a statement similar to the following: “Oregon law prohibits us from requiring you to get repairs to your vehicle at a particular motor vehicle repair shop. You have the right to select the motor vehicle repair shop of your choice.”
If an insured opts not to take the adjuster’s recommendation, the insurer may not limit the cost of repairs necessary to return the vehicle to a pre-loss condition.
If the claimant decides to use the repair shop recommended by the adjuster, the insurer must provide a statement to the insured within three business days after the date of acceptance in the following form: “We have recommended a motor vehicle repair shop. If you agree to use our recommended repair shop, your vehicle will receive repairs returning it to a pre-loss condition relative to safety, function and appearance at no additional cost to you other than as stated in the insurance policy or as otherwise allowed by law.”
Initially, the Multnomah County Circuit Court agreed that Bellshaw and other class action members were correct in their belief that Farmers had omitted some of this required information in their notices and granted a summary judgment of $26.3 million in favor of the plaintiff.
However, the Supreme Court of the State of Oregon later reviewed the case and reversed the prior judgment on the grounds that insurers that adopt notice wording that is already approved by the DCBS are satisfying their obligations to the statute — regardless of whether the approved language is directly in line with the information required.
Justia reports that this case has been remanded to the circuit court for further proceedings required for this interpretation.
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