Advocate
02-26-2009, 10:14 PM
the repair industry would rue the day the BBT preserved its “save our DRPs” statute in the Fifth Circuit Court of Appeals? Remember last year when I pointed out that insurers would take that decision and virtually destroy any future “anti-steering” attempts?
Well, Leader Lee and his ilk became the latest beneficiaries of the BBT’s incredibly naïve effort. On Wednesday, during a much hyped Kalifornia DOI hearing regarding a proposed anti-steering regulation, one insurer group (PIFC) testified as follows (actually, as you will read, it was more of a threat):
"Nowhere has the Department attempted to balance the legitimate state interests in (a) preventing insurer coercion of a claimant's selection of an auto repair shop with (b) the guaranteed First Amendment Commercial Free Speech Rights of insurers to provide truthful, non-deceptive information to claimants that aid in their "choice" of an auto repair facility. This need for harmonizing state law with constitutional safeguards was squarely addressed in Allstate Ins. Co. v. Abbott, 495 Fed.3d 151 (5th Cir. 2007)" (Note: this is the BBT’s wonderful case.) "In Abbott, the United States Court of Appeals, Fifth Circuit, relied on a long line of cases articulating the United States Constitution's First Amendment protection of truthful and non-deceptive commercial free speech to strike down a Texas statute. That case involved two questions related to automobile repair statutes - only one of which is relevant here. That provision, arguably less restrictive than proposed Section 2698.93, placed certain restrictions as to what an insurer could say in its marketing communications, i.e. recommendations to consumers about "tied" (insurer owned) shops over other "unaffiliated" repair facilities. In the Abbott Case, the Court affirmed the District Court's holding that the law at issue was an unconstitutional restriction upon an insurer's First Amendment Commercial Free Speech.
In applying the test articulated by the United States Supreme Court in the seminal case, Central Hudson Gas & Electric Corp., v. Public Service Commission of New York, 447 U.S. 557 (1980), for determining whether a regulation restraining commercial speech is constitutionally permissible, the court in Abbott first cleared the threshold issue: whether the commercial speech concerns unlawful activity or is misleading. Under Central Hudson, the court then must determine whether 1) the state has substantial interest in regulating speech; 2) the restriction on speech directly advances the state interest involved; and 3) the state's interest could be equally well served by a more limited restriction on free speech.
The Abbott Court, in applying the Central Hudson test, found the state had a legitimate interest in consumer protection and the promotion of fair competition, but found the state advanced no legitimate interest in preventing non-misleading and truthful referrals to a tied body shop. The Abbott Court opined that "consumers benefit from more, rather than less, information." (Abbott. supra, 495 F.3d at p. 167.) The Court went on to say that a state "attempting to control the outcome of consumer decisions following such communications by restricting lawful speech is not an appropriate way to advance a state interest in protecting consumers." Abbott, supra, 495 F.3d at p. 167 citing Thompson v. Western States Med Ctr., 535 U.S. 357, 374 (2002).
Ultimately, the Abbott Court found the State did not show that consumers benefit by restricting the truthful speech about the benefits of using a tied auto body repair shop. Quoting Central Hudson, the Court said "Commercial expression not only serves the economic interest of the speaker, but also assists consumers and furthers the societal interest in the fullest possible dissemination of information... People will perceive their own best interests if only they are well enough informed, and the best means to that end is to open the channels of communication rather than to close them." Abbott, supra, 495 F.3d at p. 167 citing Central Hudson, supra, 447 U.S. at 562.
Finally, the Court found that the commercial speech provisions were not narrowly tailored to meet the asserted state objectives and that the State failed to meet the burden of justifying the restriction. The court suggested there could be a more limited restriction such as disclosing the ownership relationship Allstate maintained, or informing customers of the state's anti-steering law.
Applying the Central Hudson test outlined in the Abbott case, the Department's proposed regulation fails to satisfy the constitutional law requirements necessary to support a lawful restriction of an insurer's right to engage in Commercial Free Speech. While the Department may argue a legitimate interest in consumer protection and the promotion of fair competition, as was the case in Abbott, the Department advances no legitimate interest in preventing non-misleading and truthful information to a claimant. An appropriate first step would be for the Department to outline what unlawful behavior it is seeking to regulate and then provide an analysis of why proposed Section 2698.93(d) is the least restrictive means of regulating the unlawful behavior. In particular, the pen ended "includes but is not limited to ... "phrase in Section 2698.93(d) is uniquely unhelpful.
Instead of attempting to justify why proposed Section 2698.93 is consistent with commercial free speech rights, the Department has ignored the issue and failed to demonstrate any balancing of the interests involved. The Department has not even attempted to justify its proposed limitation on information to consumers about benefits and options available to them. The Legislature has made the policy decision that claimants should be protected from being required to use the carrier-chosen body shop. But what is the public policy benefit to the consumer if his or her own insurer is prohibited from communicating truthful, non-deceptive information that would help the consumer make a choice of body shop? The goal should be consumer choice - and isn't informed choice a better option for the consumer?
The stated purpose of, and therefore the regulatory authority derived from 758.5 to promulgate the Proposed Regulations, if it exists, is to protect consumers and their ability to freely choose an automotive repair dealer. Section 2698.93 deprives the consumer of truthful and beneficial information during the difficult time following an accident, while seeming to protect certain body shops - the group pressuring the Department for protection, a group not in fact regulated by the Department.
At a minimum, regardless of whether the underlying facial constitutionality of Section 758.5 has been determined by a California appellate court, the Department is required to craft regulations that include consideration of applicable guarantees of fundamental rights, including commercial free speech rights. The Department has utterly failed to examine how the Proposed Regulation would abridge fundamental rights of insurers and, for this failure to review consistency with applicable constitutional protections, the Department should withdraw its regulations pending further consideration.
For as the Abbott Court held, "[ilt is well established that the party seeking to uphold a restriction on commercial speech carries the burden of justifying it." Abbott, supra, 495 F.3d at p. 168, citing Thompson, supra, 535 U.S. at 373. The Department has failed to provide any justification for its unconstitutional speech restrictions.
We respectfully request that the Department provide a justification of how the Proposed Regulation satisfies the Central Hudson test before any regulation is implemented."
Gomer should be happy with what his limited abilities have wrought. Another example of leadership at its finest. :D
Then again, what do I know… :D
"Now I am become Death, the destroyer of worlds." - J. Robert Oppenheimer 1945
Well, Leader Lee and his ilk became the latest beneficiaries of the BBT’s incredibly naïve effort. On Wednesday, during a much hyped Kalifornia DOI hearing regarding a proposed anti-steering regulation, one insurer group (PIFC) testified as follows (actually, as you will read, it was more of a threat):
"Nowhere has the Department attempted to balance the legitimate state interests in (a) preventing insurer coercion of a claimant's selection of an auto repair shop with (b) the guaranteed First Amendment Commercial Free Speech Rights of insurers to provide truthful, non-deceptive information to claimants that aid in their "choice" of an auto repair facility. This need for harmonizing state law with constitutional safeguards was squarely addressed in Allstate Ins. Co. v. Abbott, 495 Fed.3d 151 (5th Cir. 2007)" (Note: this is the BBT’s wonderful case.) "In Abbott, the United States Court of Appeals, Fifth Circuit, relied on a long line of cases articulating the United States Constitution's First Amendment protection of truthful and non-deceptive commercial free speech to strike down a Texas statute. That case involved two questions related to automobile repair statutes - only one of which is relevant here. That provision, arguably less restrictive than proposed Section 2698.93, placed certain restrictions as to what an insurer could say in its marketing communications, i.e. recommendations to consumers about "tied" (insurer owned) shops over other "unaffiliated" repair facilities. In the Abbott Case, the Court affirmed the District Court's holding that the law at issue was an unconstitutional restriction upon an insurer's First Amendment Commercial Free Speech.
In applying the test articulated by the United States Supreme Court in the seminal case, Central Hudson Gas & Electric Corp., v. Public Service Commission of New York, 447 U.S. 557 (1980), for determining whether a regulation restraining commercial speech is constitutionally permissible, the court in Abbott first cleared the threshold issue: whether the commercial speech concerns unlawful activity or is misleading. Under Central Hudson, the court then must determine whether 1) the state has substantial interest in regulating speech; 2) the restriction on speech directly advances the state interest involved; and 3) the state's interest could be equally well served by a more limited restriction on free speech.
The Abbott Court, in applying the Central Hudson test, found the state had a legitimate interest in consumer protection and the promotion of fair competition, but found the state advanced no legitimate interest in preventing non-misleading and truthful referrals to a tied body shop. The Abbott Court opined that "consumers benefit from more, rather than less, information." (Abbott. supra, 495 F.3d at p. 167.) The Court went on to say that a state "attempting to control the outcome of consumer decisions following such communications by restricting lawful speech is not an appropriate way to advance a state interest in protecting consumers." Abbott, supra, 495 F.3d at p. 167 citing Thompson v. Western States Med Ctr., 535 U.S. 357, 374 (2002).
Ultimately, the Abbott Court found the State did not show that consumers benefit by restricting the truthful speech about the benefits of using a tied auto body repair shop. Quoting Central Hudson, the Court said "Commercial expression not only serves the economic interest of the speaker, but also assists consumers and furthers the societal interest in the fullest possible dissemination of information... People will perceive their own best interests if only they are well enough informed, and the best means to that end is to open the channels of communication rather than to close them." Abbott, supra, 495 F.3d at p. 167 citing Central Hudson, supra, 447 U.S. at 562.
Finally, the Court found that the commercial speech provisions were not narrowly tailored to meet the asserted state objectives and that the State failed to meet the burden of justifying the restriction. The court suggested there could be a more limited restriction such as disclosing the ownership relationship Allstate maintained, or informing customers of the state's anti-steering law.
Applying the Central Hudson test outlined in the Abbott case, the Department's proposed regulation fails to satisfy the constitutional law requirements necessary to support a lawful restriction of an insurer's right to engage in Commercial Free Speech. While the Department may argue a legitimate interest in consumer protection and the promotion of fair competition, as was the case in Abbott, the Department advances no legitimate interest in preventing non-misleading and truthful information to a claimant. An appropriate first step would be for the Department to outline what unlawful behavior it is seeking to regulate and then provide an analysis of why proposed Section 2698.93(d) is the least restrictive means of regulating the unlawful behavior. In particular, the pen ended "includes but is not limited to ... "phrase in Section 2698.93(d) is uniquely unhelpful.
Instead of attempting to justify why proposed Section 2698.93 is consistent with commercial free speech rights, the Department has ignored the issue and failed to demonstrate any balancing of the interests involved. The Department has not even attempted to justify its proposed limitation on information to consumers about benefits and options available to them. The Legislature has made the policy decision that claimants should be protected from being required to use the carrier-chosen body shop. But what is the public policy benefit to the consumer if his or her own insurer is prohibited from communicating truthful, non-deceptive information that would help the consumer make a choice of body shop? The goal should be consumer choice - and isn't informed choice a better option for the consumer?
The stated purpose of, and therefore the regulatory authority derived from 758.5 to promulgate the Proposed Regulations, if it exists, is to protect consumers and their ability to freely choose an automotive repair dealer. Section 2698.93 deprives the consumer of truthful and beneficial information during the difficult time following an accident, while seeming to protect certain body shops - the group pressuring the Department for protection, a group not in fact regulated by the Department.
At a minimum, regardless of whether the underlying facial constitutionality of Section 758.5 has been determined by a California appellate court, the Department is required to craft regulations that include consideration of applicable guarantees of fundamental rights, including commercial free speech rights. The Department has utterly failed to examine how the Proposed Regulation would abridge fundamental rights of insurers and, for this failure to review consistency with applicable constitutional protections, the Department should withdraw its regulations pending further consideration.
For as the Abbott Court held, "[ilt is well established that the party seeking to uphold a restriction on commercial speech carries the burden of justifying it." Abbott, supra, 495 F.3d at p. 168, citing Thompson, supra, 535 U.S. at 373. The Department has failed to provide any justification for its unconstitutional speech restrictions.
We respectfully request that the Department provide a justification of how the Proposed Regulation satisfies the Central Hudson test before any regulation is implemented."
Gomer should be happy with what his limited abilities have wrought. Another example of leadership at its finest. :D
Then again, what do I know… :D
"Now I am become Death, the destroyer of worlds." - J. Robert Oppenheimer 1945