Body Shop – Not an Insured – Can’t Sue On Anti-Steering Statute

Only Parties to Insurance Contracts Can Sue Based on Anti-Steering Statutes

Legislatures, with the odd belief that insurers are in business to take advantage of those they insure have enacted statutes to protect insurance consumers from wrongful conduct by their insurer. In Louisiana such a statute allows an insured to bring an action to collect fines and damages if the insurer breaches the intent of the statute.

In Medine’s Collision Center, LLC v. Progressive Direct Ins. Co. Court of Appeal of Louisiana, — So.3d —- 2015-1661, 2016 WL 3688418 (La.App. 1 Cir. 7/12/16) the Court of Appeal of Louisiana granted certiorari to determine whether the statute, La. R.S. 22:1892(D)(1,) provides a right of action for body shops to seek a fine or injunctive relief from insurers.


The plaintiff, Medine’s Collision Center, LLC, is a body shop that, inter alia, repairs automobiles covered by insurance policies that have been involved in motor vehicle accidents. According to Medine’s, a substantial portion of its revenue and income derives from insurance payments. In August 2015, Medine’s filed suit against Progressive Direct Insurance Company and Progressive Security Insurance Company, alleging that the two insurers were acting in concert with one another to steer customers away from Medine’s business.

Medine’s specifically pled the application of La. R.S. 22:1892, an insurance penalty statute that contains the following anti-steering provision: “D. (1) When making a payment incident to a claim, no insurer shall require that as a condition to such payment, repairs be made to a motor vehicle, including window glass repairs or replacement, in a particular place or shop or by a particular entity. Any insurer violating the provisions of this Subsection shall be fined not more than five hundred dollars for each offense.”

Pursuant to La. R.S. 22:1892(D)(1), Medine’s requested injunctive relief, the imposition of a fine on the insurers, and damages.

Defendants responded to the petition by filing two exceptions. Defendants first raised the peremptory exception asserting the objection of no right of action, claiming Medine’s had no right of action under La. R.S. 22:1892(D)(1) because it was neither an insured nor a third-party claimant asserting a claim under an insurance policy. Defendants alternatively raised the dilatory exception raising the objections of vagueness and ambiguity, claiming that the petition failed to provide the specificity and detail necessary to put the defendants on notice of Medine’s claim against them.

When the matter came on for hearing, the trial court denied the defendants’ exception raising the objection of no right of action and granted the defendants’ exception raising the objections of vagueness and ambiguity. The ruling was memorialized in a judgment signed November 9, 2015. Defendants contend that La. R.S. 22:1892(D)(1) can only be interpreted as establishing rights for insureds and third-party claimants with claims brought under an insurance policy—not for third-party body shops—when the statute is read as a whole, jurisprudence interpreting the statute is taken into account, and the legislative history of the anti-steering provision is considered.

The Text of La. R.S. 22:1892

 The text of a law is the best evidence of legislative intent. Where part of an act is to be interpreted, it should be read in connection with the rest of the act and all other related laws on the same subject.

Although Subsection D of La. R.S, 22:1892 does not specify to whom the cause of action belongs, a full reading of the statute shows that the right of action for “steering” is exclusive to insureds or third-party claimants who claim their insurer, or the insurer of a tortfeasor, steered them to a particular body shop. After all, Subsection A of La. R.S. 22:1892 addresses the insurer’s deadlines with respect to certain actions it must take when adjusting insurance claims of first-party insureds and third-party claimants. Subsection B addresses the penalties that may be assessed against an insurer that fails to comply with the duties it owes to first-party insureds and third-party claimants under Subsection A; it also establishes additional duties the insurer owes to third-party claimants. Subsection C sets forth the manner in which the claims of first-party insureds and third-party claimants must be paid. Each of these sections governs the relations between insurers, insureds, and third-party claimants regarding claims brought under insurance policies.

Subsection D, under which Medine’s asserts the underlying action, provides that an insurer cannot condition the payment of a claim upon the requirement that the repairs be made at a particular place or shop or by a particular entity. Logic suggests that Subsection D would likewise govern the insurer’s relations with its insureds or third-party claimants bringing claims under an insurance policy. In this case, Medine’s has not presented a claim under any insurance policy; it is a third-party with no contractual relationship to the defendants.

Jurisprudence Interpreting La. R.S. 22:1892

 Section 1892 is penal in nature and, therefore, must be strictly construed. Strict construction requires that every doubt must be resolved against the imposition of a penalty. Additionally, recovery under Section 1892 requires a plaintiff to first have a valid, underlying, substantive claim upon which insurance coverage is based; the statute does not provide a cause of action against an insurer absent a valid, underlying, insurance claim.

The legislative history reveals an absence of any evidence suggesting that the anti-steering provision was ever intended to create a right in favor of claimants like Medine’s. The plain reading of La. R.S. 22:1892, jurisprudence, and the legislative history of the anti-steering provision of La. R.S. 22:1892, taken together, convince us that Subsection D of La. R.S. 22:1892 fails to create a right of action in favor of Medine’s, a body shop possessing no contractual relationship with the defendants.

Based on the foregoing, the court found that Medine’s lacks the right to recover a fine or seek injunctive relief pursuant to La. R.S. 22:1892(D)(1).

The court dismissed Medine’s claims premised on that statute. Costs arising from review of this matter are assessed to the respondent, Medine’s Collision Center, LLC.


When a statute is designed to protect insured’s from wrongful actions of their insurer it applies only to the insured and the insurer. In Louisiana insureds can sue. In other states only the department of insurance can enforce the statute. Regardless, in this case, the body shop had no contractual relationship with the insurer and, as a result, had no right to sue.

ZALMA-INS-CONSULT                      © 2016 – Barry Zalma

Barry Zalma, Esq., CFE, practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.  He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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