Country Companies settles aftermarket parts lawsuit for $6.3 million
Country Companies has agreed to pay $6.3 million to settle a class action lawsuit that alleges the insurer used inferior-quality auto parts to repair policyholders' vehicles.
|About 60,000 current and former Country Companies policyholders will receive about $60 to $75 each.|
The lawsuit, which was filed in October 1999 in Marion County Superior Court, Salem, Ill., accused Country Companies of "breach of contract" by repairing policyholders' vehicles with non-Original Equipment Manufacturer (non-OEM) parts, also referred to as "aftermarket parts." The insurer's auto policies stated that the insurer would use parts of "like kind and quality" for repairs. The plaintiffs contended that non-OEM parts did not meet this standard.
Judge David Sauer gave the settlement preliminary approval on Feb. 8. A hearing is scheduled for April 25, where it is expected that the settlement will receive final approval.
Thomas Thrash, an attorney for the plaintiffs, estimates that about 60,000 current and former Country Companies policyholders will receive about $60 to $75 each. Although the settlement affects policyholders nationwide, about 75 percent of the insurer's policyholders live in Illinois. In addition to Illinois, the insurer does business in nine other states: Alaska, Arizona, Colorado, Kansas, Missouri, Nevada, Oklahoma, Oregon, and Washington.
Thrash would not say what attorneys' fees will cost in the case, as the judge will make the final decision on attorneys' fees on April 25. However, he says that a third of the settlement "would not be an unreasonable amount."
The "best interest" of policyholders
Country Companies, based in Bloomington, Ill., does not admit wrongdoing in the settlement. Country Companies "determined it is in the best interest of its policyholders to settle the case and avoid further costs and uncertainty associated with lengthy and complex litigation," the insurer says in a statement.
However, Country Companies stopped using non-OEM parts in October 1999 shortly after the landmark State Farm judgment in which the insurer had to pay $1.186 billion for similar allegations.
Class members include current and former policyholders from Country Companies who had their vehicles fixed with non-OEM parts from July 1, 1993, to the present, even though the insurer suspended use of non-OEM parts in October 1999.
According to the settlement, non-OEM parts covered by the settlement include, but are not limited to, fenders, hoods, grilles, and bumpers. Non-OEM parts that are not covered under the settlement include radiators, shocks, batteries, and condensers. Thrash says the case focused on materials used on the outer parts of vehicles, such as sheet metal and plastic. Lawyers did not collect evidence for non-OEM internal car parts.
Thrash says that cash rewards will be paid on a "per claim" basis instead of a "per part" basis. For example, if one policyholder filed a claim to have his bumper repaired with a non-OEM part, and another filed a claim to have his bumper, hood, and grille fixed with non-OEM parts, they would receive the same amount. Thrash says the process of finding out how many non-OEM parts were used in each repair would be too costly and eat into the settlement.
Class members should receive notice of the settlement around March 1. They do not have to do anything to secure a piece of the settlement. If the settlement receives final approval, Country Companies will start issuing settlement checks to class members shortly after the hearing on April 25.