Agent Informer - National Association of Professional Allstate Agents ...
Agent Informer - National Association of Professional Allstate Agents ...
Agent Informer - National Association of Professional Allstate Agents ...
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<strong>Allstate</strong> Settles Bad-faith Lawsuit<br />
July 10, 2008, By Dan Margolies, The Kansas City Star<br />
A bad-faith case against <strong>Allstate</strong> Insurance that drew national attention and prompted the judge to levy fines<br />
against the insurer topping $7 million has been settled on undisclosed terms.<br />
A court hearing on whether to approve the settlement has been scheduled for July 21, the day the case was<br />
scheduled to go to trial before Jackson County Circuit Judge Michael Manners.<br />
Attorneys for both sides declined to disclose the terms <strong>of</strong> the settlement. Mike Siemienas, a spokesman for<br />
<strong>Allstate</strong>, the nation’s second-biggest home and auto insurer, said the company was pleased the case had been<br />
resolved but declined to elaborate.<br />
The case stemmed from a collision on Interstate 70 near the U.S. 65 exit. On Sept. 15, 2000, Warrensburg<br />
resident Dale Deer stopped in a construction zone. Some time later, a car driven by Paul Aldridge <strong>of</strong> Hawaii<br />
and traveling an estimated 70 miles an hour slammed into the rear <strong>of</strong> Deer’s pickup truck.<br />
Deer staggered out <strong>of</strong> the truck. He was taken to a hospital and released later that day. In 2003, he was<br />
diagnosed with severe damage to his back and neck, which doctors attributed to the accident.<br />
Deer sued <strong>Allstate</strong> and Aldridge for his medical expenses, which ran into the hundreds <strong>of</strong> thousands <strong>of</strong> dollars.<br />
<strong>Allstate</strong> eventually agreed to pay him $750,000 plus interest. That would have ended the matter, but <strong>Allstate</strong><br />
did not pay him. Deer sued the insurer again. This time <strong>Allstate</strong> settled for about $1.2 million.<br />
In the meantime, Aldridge also sued <strong>Allstate</strong>, claiming that it had mishandled his case and acted in bad faith.<br />
Attorneys for both Aldridge and Deer sought <strong>Allstate</strong> documents to show how the company set up a claims<br />
payment system in the 1990s that low-balled clients and allowed the company to reap huge pr<strong>of</strong>its.<br />
<strong>Allstate</strong> refused to produce the documents, which it said contained trade secrets used to create policies and<br />
claims procedures. Releasing them, it said, would give the plaintiffs’ lawyers information on trial strategy.<br />
The documents included slides prepared in the early 1990s by McKinsey & Co., a consulting firm that allegedly<br />
advised <strong>Allstate</strong> to settle claims quickly for pennies on the dollar and fight claimants who resisted — for years,<br />
if necessary. One slide was titled “Good Hands or Boxing Gloves,” an allusion to the insurer’s “You’re in good<br />
hands with <strong>Allstate</strong>” slogan.<br />
After <strong>Allstate</strong> refused to turn over the documents, Manners last September held the insurer in contempt and<br />
fined it $25,000 per day. The fine eventually grew to more than $7 million.<br />
In November, the Missouri Supreme Court ordered <strong>Allstate</strong> to disclose the documents. <strong>Allstate</strong> turned over<br />
more than 120,000 pages.<br />
The documents have figured prominently in other litigation and regulatory proceedings. In January, Florida’s<br />
insurance commissioner, Kevin McCarty, suspended <strong>Allstate</strong>’s authority to sell insurance in that state after it<br />
resisted subpoenas to produce the documents. A Florida appeals court later upheld McCarty’s ruling.<br />
The suspension was lifted after <strong>Allstate</strong> furnished a sworn affidavit stating that it had turned over the<br />
documents and would comply with additional document requests.<br />
In April, <strong>Allstate</strong> posted on the Internet 150,000 pages <strong>of</strong> documents related to its claims-handling practices. In<br />
an accompanying statement, <strong>Allstate</strong> said, “Public criticisms by people with a vested interest in creating an<br />
inaccurate picture <strong>of</strong> the company’s claim practices have been based unfairly on only snippets from the<br />
documents taken out <strong>of</strong> context. Because <strong>of</strong> the need to address misunderstandings resulting from the growing<br />
misplaced focus by our critics on very small pieces <strong>of</strong> the whole, we have decided to make the documents<br />
public.”