Facts

Farmers Insurance Exchange ("Farmers") filed this action, on behalf of itself and of the People of the State of California, pursuant to California Insurance Code section 1871.7, seeking damages, penalties and assessments for insurance fraud. The defendants, Hollywood Auto Collision Inc. a.k.a. Hollywood Auto Body Inc. and its owners, committed insurance fraud, as it is defined by Section 1871.7, by waiving insurance deductibles and then falsely billing and accepting payments for auto body repair work that they did not perform.

Farmers contended that the defendants participated in the preparation and submittal of false and fraudulent insurance claims in violation of Insurance Code section 1871.7; that the defendants are liable for statutory damages set pursuant to Insurance Code Section 1871.7; that the defendants have engaged in unfair business practices in violation of Business and Professions Code section 17200. The plaintiffs contended that the plaintiffs are entitled to restitution of the defendants' ill-gotten gains pursuant to Business and Professions Code section 17200.

Farmers has identified fraudulent practices relative to at least eight auto damage claims in which the vehicles were brought to Hollywood Auto Body in Hollywood for repairs. Defendant Sean Kim is president and general manager of defendant Hollywood Auto Collision Inc. a.k.a. Hollywood Auto Body Shop Inc.

Farmers re-inspected all of the vehicles in question. The inspections confirmed that the defendants charged for, and were paid for, services not rendered; to replace parts that were not replaced and instead repaired or not fixed at all; and for more expensive parts (e.g., OEM vs. A/M) than were actually installed on the vehicles. The payments on the final estimates that defendants accepted totaled $37,456.37, but were overpaid by 20 percent to as much as 85 percent based on the work actually performed.

Farmers presented evidence that the defendants pursued payment on final repair estimates knowing the estimates falsely represented what was done on the vehicles for which they received payment on at eight vehicles.

The defendants admitted in sworn testimony that they agreed to perform certain work and then deliberately altered the work actually performed to increase their profits and cover waived deductibles. The defendants further admitted accepting full payment from Farmers based on the final repair invoices despite having performed cheaper repairs that were represented on the invoices.

The defendants admitted they waived deductibles and cut corners on repairs to cover the deductibles; but defendants denied that their conduct was illegal or actionable.

Other Information

FILING DATE: Feb. 10, 2006. Following the trial, the court granted Farmers' requested injunctive relief, signing a judgment that included an injunction specifically prohibiting the defendants from any of the following improper activities: submitting false claims; improperly waiving insured deductibles; failing to obtain customer authorization before changing the method of vehicle repair; submitting untrue or misleading statements to Farmers; and to comply with laws regarding estimates and authorization requirements. Plaintiff is entiteld to attorneys fees, costs and reasonable expenses. Motions for these sums are pending.

Deliberation

4.5 hours

Poll

10-2 (on penalties and assessments)

Length

five days