Rear-Ended By Auto Repair Fraud

Jim Asay was rear-ended on California's I-15.

"All of a sudden I got hit from behind, then I passed out for a few seconds," says Asay.

Then, as CBS News Correspondent Mika Brzezinski reports, he was clobbered by the Caliber Collision Centers.

"They didn't fix it the way they were supposed to," says Asay. "They had not repaired the frame of the car correctly. It made the car unsafe."

His car was examined by California's Bureau of Auto Repair, which found the work was "grossly negligent." The California Attorney General has accused Caliber of ripping off customers at locations across the state.

Worse still, is what critics like Ron Pyle say is a colossal conflict of interest, that the repair shop chain is owned by a group of insurance companies.

"The folks in that facility actually work for the insurance company," says Pyle, the president of the Automotive Service Association. "I think the consumer is not served by that.

"It's a third party influence that dictates how I conduct business."

It's an influence so powerful, this independent auto mechanic did not want to reveal his identity.

"They can come right out and tell you, 'If you want to play by the rules great and if not, we'll pull the car and all the work,'" he told CBS News. "All the time, the bottom line is they want to save money."

Caliber denied CBS' request for an interview but issued a statement attacking the attorney general's charges, saying, "Caliber has not and does not commit fraud."

CBS visited the shop where the authorities say at least four customers, including Asay, were ripped off.

The undercover cameras show a manager assuring us of Caliber's good name.

"I won't let a car go out of here that's unsafe," he says. "I haven't heard any bad things about our reputation."

Later he admitted Caliber had had a problem but denied it was at his shop.

"Basically, what happened was one of our other stores had a problem," he says.

And it's not just Caliber, insurance giant Allstate owns Sterling Auto Body centers in at least 14 states.

So how is not a conflict of interest?

"Well it's not a conflict of interest because the company and the insured have the same interest," says Carl Parks, who represents the insurance industry.

Parks says the insurance company wants both good car repairs and to save money.

"The insurance company wants both," says Parks. "The insurance company wants really good repairs because that's how they keep their customers happy."

Fed up, Asay sold it to the state as evidence.

"I was sort of the unlucky consumer who didn't know any better," says Asay.

And 10 states are now looking at whether insurance companies should legally be allowed to own the auto repair industry.