The Connecticut Supreme Court on Monday reversed a lower court’s award of $34.8 million in damages against The Hartford Fire Insurance Co.
The ruling puts a cap on a 2003 class action lawsuit filed by Connecticut auto repair shops, which claimed that the insurer had unfairly required its appraisers to use artificially low labor rates in their repair estimates. Repair shops said that the practice violated the Connecticut Unfair Trade Practices Act’s regulations on impartial appraisals, and argued that they should instead be paid their prevailing labor rates.
In 2009, a jury awarded $14.8 million in compensatory damages to the plaintiffs, which included the Auto Body Association of Connecticut, Artie’s Auto Body in Wolcott, A&R Body Specialty in Wallingford, Skrip’s Auto Body in Prospect and approximately 1,000 other shops. A trial court later awarded $20 million in punitive damages.
But the high court’s opinion said that the legal logic employed in the jury’s judgement results in an “inherently contradictory regulatory scheme” in which The Hartford is lawfully permitted to determine the hourly rate it’s willing to pay for car repairs while its appraisers are ethically required to disregard that determination when negotiating with shops.
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