March 20, 2000
Allstate Insurance has illegally coerced accident victims to settle claims for far less than just compensation, according to a January ruling by King County Superior Court Judge Phillip Hubbard.
Allstate has caused victims to settle cases without legal arbitration by threatening to force cases into court if victims hire an attorney. A claim asking for $10,000 can cost more than that in legal expenses, leaving victims feeling desperate to settle for anything rather than absorb a loss.
Seattle attorney John Budlong discovered Allstate internal claims manuals that directed their insurance adjusters to contact accident victims and portray themselves as legal representatives trying to settle claims against Allstate policy holders. Many of their visits were to hospitalized victims. Allstate routinely sends victims a "Quality Service Pledge" brochure assuring the claimants that they "do not need attorneys to receive fair treatment or a fair settlement."
"We think it's likely that Allstate has defrauded thousands of citizens out of fair settlements for their injuries," said Janet Rice, president of the Washington State Trial Lawyers Association (WSTLA) in Olympia. "In this illegal scheme of deception, they were essentially attempting to represent both parties on an auto accident claim."
Allstate "engaged in the unauthorized, negligent practice of law and breached its fiduciary duties" to the plaintiffs, Hubbard concluded. "Allstate is liable for any legally recoverable damages" caused by its illegal schemes. The State Insurance Commissioner's office is conducting an investigation for possible enforcement against Allstate.
Budlong's discovery adds teeth to 50 suits pending against Allstate throughout the country, including one being re-filed in Pennsylvania, said Sue Evans, WSTLA Communications Director.
"Previous suits didn't have the claims' manuals Budlong had," said Evans. "Most drivers think that if they're hit by an insured driver, they'll be okay. Most victims only want their expenses covered. But this kind of deception has left victims without enough compensation to pay their bills while recovering from injuries. It's too bad that this sort of deception puts all insurance companies in a bad light. Allstate has forced a 60 percent trial case rate, instead of arbitration. State Farm and Farmers, for example, have about a 25 percent trial case average."
Proposed Washington State Senate Bill 5659 would raise the required minimum for arbitration eligibility of accident claims to $50,000, said Evans.
"But State Rep. Mike Carroll, R-Lakewood, the chair of the House Judiciary Committee, caved in to the insurance lobby and killed the bill in 1999, and again this year," she said. "Virtually the entire legal community supports the bill, including representatives of several bar associations and several judges who testified to its merits. The only people to testify against it were auto insurance companies."
Rice and Evans encourage anyone who has settled a claim with Allstate within the past five years to call the King County Bar Association's attorney referral service at 206-623-2551, or access it online at www.kcba.org.