Using an innovative state law for the first time in Northern California, Farmer's Insurance charged an Antioch auto repair shop with submitting tens of thousands of dollars in fraudulent insurance claims.
The civil suit, made public Tuesday, uses a 1993 law that makes it easier for insurers to prosecute fraud. Farmer's is demanding that Templer Auto Body pay $1.1 million in damages and $500,000 in legal expenses for inflating bills and submitting bills for work that was never done. The company said the fraud took place over the course of two years and 31 claims.
Templer Auto Body referred all questions to owner Lawrence Templer. Attempts to reach Templer at the shop were unsuccessful Tuesday. Farmer's began investigating the shop two years ago after receiving an anonymous tip, and sent insurance company investigators to interview shop customers and inspect their cars.
In a majority of the cases eventually pursued, they discovered Templer Auto Body was allegedly fraudulently inflating Farmer's bills by at least 50 percent, according to Dennis Kass, the attorney prosecuting the case for Farmer's. "This was aggressive fraud," Kass said.
In one case, said Kass, Farmer's examined a bill for $17,725 in repairs and determined that $14,630 of those repairs were false, even when giving the repair shop the benefit of the doubt on borderline items. In another case, a bill for more than $14,800 had been fraudulently inflated by $10,300. In other cases, the shop charged for more than three times the cost of services rendered, Farmer's alleges. "They thought no one was looking, so they could do this," Kass said.
Farmer's investigators were usually able to infer fraud with simple questions. For example, in one case cited by Kass, a bill stated that a shattered window was replaced. Investigators simply asked the car owner whether the window was damaged in an accident and were told it was unscathed and had not been replaced.
In other cases they simply examined body panels and other parts to determine whether they had been damaged and, if so, whether they had been repaired or replaced in the way the body shop had said. In some cases, Farmer's said it was billed for new parts when the body shop had actually used refurbished parts in its repairs.
"Metal doesn't lie," said Kass.
Kass said his firm has been prosecuting insurance fraud cases under the 1993 state statute for a few years now, but only recently trained a lawyer in its San Francisco office to pursue cases under the regulation.
Insurance fraud is better organized and widespread in the Los Angeles area, he said, but his firm is now working on additional cases in Northern California and expects to file more in the coming months.
The law, AB 1050, allows insurance companies to prosecute for fraud even if they have not yet lost money, provides for restitution of up to three times the fraudulent claim and gives insurance companies greater latitude to investigate fraud independent of law enforcement authorities.
Local prosecutors are typically allowed to review the evidence and block insurance company prosecution if they feel the evidence is not sufficiently convincing. If they raise no objections, as was the case with Templer, the insurance company complaint is unsealed and a civil trial commences.
Mary Flynn, a Farmer's spokeswoman, said the company usually has a dozen fraud investigations under way at a time and is noticing a "definite trend" toward more aggressive fraud attempts.
Ryan Tate is a business reporter. Reach him at rtate@cctimes.com. Times staff writer Jane Ramsey contributed to this story.
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