California has a statute that prohibits insurance companies from funneling insureds to pre-selected automobile mechanics for car repairs after an accident:
Insurance Code section 758.5 (section 758.5) prohibits an insurer from either requiring an insured's automobile be repaired by a specific automobile repair dealer or suggesting or recommending that a specific automobile repair dealer be used unless the insured is informed in writing of his or her right to select another repair dealer.
Download Hughes v. Progressive Direct Insurance Co. (Cal. 2d DCA, Div. 7, Case No. B224990, Opinion Filed June 15, 2011) PUBLIC ACCESS, also published as 2010 WL 2348325 *1 (Cal. 2d DCA, Div. 7, June 15, 2011)(authorized password required to access Westlaw).
The California District Court of Appeal has just ruled in that case that Insurance Code Section 758.5 confers an implied cause of action. Id.
The California District Court of Appeal followed the ruling of the California Supreme Court in Royal Globe Insurance Co. v. Superior Ct., 23 Cal. 3d 880, 592 P.2d 329, 153 Cal. Rptr. 842 (1979). The California Supreme Court overruled Royal Globe in Moradi-Shalal v. Fireman's Fund Insurance Cos., 46 Cal. 3d 287, 758 P.2d 58, 250 Cal. Rptr. 116 (1988). In the course of overruling Royal Globe, the Supreme Court in Moradi-Shalal rejected the reasoning of inferring a cause of action under perhaps more explicit statutory language than can be found in Section 758.5.
The shelf life of Hughes v. Progressive Direct Insurance Co. may be short.
Time will tell.
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