Ohio Insurance Director Lee Covington has filed a “friend of the court” brief supporting the decision of the Cuyahoga County Court of Common Pleas that refused to certify a class action lawsuit against Mayfield Village-based Progressive Insurance Company.
Progressive, the fourth largest auto insurer in the U.S., is the main defendant in the lawsuit filed on behalf of claimants seeking recovery for the use of non-original equipment manufacturer (OEM) parts in making automobile repairs. The lower court decision not to certify the suit as a class action is being appealed to the Eighth District Court of Appeals in Cuyahoga County where Covington filed his brief.
The controversy is one of a series of class actions involving the use of non-OEM parts. The bulletin points out that “Ohio law allows the use of non-OEM parts, and requires insurers and repair facilities to notify a consumer when an estimate for repairs is based in whole or in part on the use of non-OEM parts.” It added that “Studies from consumer groups have found that the use of non-OEM parts provides significant savings to consumers.”
Covington’s brief, not only supports the decision to deny class action status to the lawsuit and the merits of OEM and non-OEM parts, but also addresses a fundamental question concerning insurance regulation by the states. The brief states that certifying a national class action “would give an extraterritorial effect to Ohio law and improperly overlay this court’s judgment on other states’ insurance laws and regulations.”
The Utah case of Campbell vs. State Farm, currently on appeal to the U.S. Supreme Court, over the issue of a $145 million punitive damage award that allowed a jury to consider State Farm’s nationwide conduct, raises similar questions.
Covington’s position is clear. “I am fundamentally against allowing a court in another state to make policy that will affect Ohio consumers and insurers, and I do not believe Ohio courts should assume any role in the regulation of the insurance industry in any other state,” he declared. “Class action lawsuits such as these have the potential to significantly undermine the authority of every state insurance department to regulate insurance for the benefit of its own consumers.”