AG compels Texas Department of Insurance to release information on State Farm labor rate investigation


In response to a directive from the Attorney General’s office, the Texas Department of Insurance (TDI) released a document sought in an open records request related to an investigation into State Farm labor rates.

The document, a three-page request for information sent by TDI to State Farm in October 2017, was provided to Burl Richards, president of the Auto Body Association of Texas, who made the request for open records on November 17.

Asked for more information, a TDI spokesperson said Friday that “releasable records were sent to the original requester” and advised Repairer Driven News to file an open records request to receive copies.

The OAG also denied TDI’s request to issue an “advance ruling”, allowing TDI to “withhold information obtained during a market driving test without seeking a ruling from your office”, as the provided by state law. This would have given the office the power to deny similar future requests without involving the AG.

Which information is protected and which is not, was not specified in the three-page notice released Tuesday by Assistant Attorney General Gerald Arismendez.

“Upon review, we find that State Farm has demonstrated that some of the information at issue constitutes business or financial information, the release of which would cause material competitive harm. Accordingly, the Department must withhold the information we have marked” under state law, Arismendez wrote.

The information that had been “marked” was not specified in the letter. The AG’s office did not respond to RDN’s request for clarification.

Richards provided RDN with a copy of the AG’s notice and the attached information request sent to State Farm, both documents he received from TDI.

“At the end of the day, the information we received is filled with big questions that were posed to SF and I applaud the specific questions,” Richards told RDN. “On the other hand, that was 7 years ago and how relevant is that information today?”

Richards explained why ABAT sought the information from TDI.

“ABAT believes that insurance surveys and other methods used by insurance companies to determine prevailing rates and processes should be reviewed annually and thoroughly investigated to ensure transparency,” he said. “Why should the way insurance compensates the consumer be considered exclusive? »

Richards argued that State Farm’s labor rate survey instructed stores to respond with the hourly rate they would charge a State Farm customer, rather than their retail or sales price. door, which could distort the result.

Additionally, he said, at least some of the respondents can participate in State Farm’s Direct Repair Program (DRP), in which the rates they can charge are set out in their agreements. Typically, DRPs promise stores a high volume of work in exchange for lower billing.

Richards, on behalf of ABAT, made an open records request for “[a]All documents related to the Texas Department of Insurance (TDI) application for the State Farm Auto Repair Labor Rate Survey, including but not limited to retailer correspondence the date the investigation was requested and the TDI person(s) making the request. »

TDI did not grant the request, instead asking Texas Attorney General Ken Paxton to determine whether the information should be released. This request was made on December 6.

Richards said the questions he wants to answer are: Did TDI receive the survey results from State Farm and, if so, when was the data request made and by who ?

State Farm had sought to protect all information requested by ABAT under Section 552.110(c) of the Texas Government Code, which protects from disclosure “business or financial information for which it is demonstrated on the basis specific factual evidence that disclosure would cause substantial competitive harm to the person from whom the information was obtained.

Arismendez wrote that State Farm met this requirement for some, but not all, of the information sought. “[W]We conclude that State Farm has not provided specific factual evidence demonstrating that the remaining information at issue constitutes business or financial information, the disclosure of which would cause substantial harm to competition. Therefore, the department cannot withhold any of the remaining information under section 552.110(c). »

The RFI, sent to State Farm County Mutual Insurance Company of Texas on October 23, 2017, lists dozens of questions and requests for documentation covering a variety of issues. The survey covers the calendar year 2015.

Questions about labor rates are just one of the seven main areas covered by the application. TDI asked State Farm about its DRP and non-DRP rates, how it sets its rates, how often the process is completed, when labor rates were last adjusted, and whether stores can appeal for a price review.

Other main sections include training, parts, DRPs, quality of repairs, complaints, and specific items including before and after analysis of vehicles involved in an accident.

TDI did not report whether State Farm responded to the survey by the October 30, 2017, deadline, or, if so, what their responses were.

More information

Settlement overturns State Farm of Texas judge’s order to release labor rate survey data


Featured Image: The United States and Texas flags fly in front of the Texas State Capitol in Austin. (Cracker Clips/iStock)

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