Allstate won’t produce records despite $25,000-a-day fine
By JOE LAMBE
The Kansas City Star

Allstate Insurance Co. lawyers made this clear Tuesday to a Jackson County judge: They will not produce key records for public view no matter how much he fines them.

And Judge Michael Manners has already fined them $25,000 a day since mid September — a total of $2.4 million and growing.

And last month the Missouri Supreme Court ordered the documents produced,

At issue are the so-called McKinsey documents, a kind of holy grail for plaintiff lawyers nationwide.

Plaintiff lawyers allege they show how Allstate set up a claims payment system in the 1990s that shortchanges clients while earning huge profits.

Allstate contends the 12,500 pages prepared by consultant McKinsey & Co. are trade secrets used to create company policies, methods and claims procedures.

Until this year, state high courts had agreed with the company. But last month the Missouri Supreme Court ruled that it must provide them in the case before Manners.

Allstate still refused. Tuesday’s hearing took place in part so Manners could consider whether to increase his daily fine.

The case stems from a car wreck seven years ago on Interstate 70. Allstate client Paul Aldridge of Hawaii ran into the back of a truck and severely injured the driver. He is suing Allstate for bad faith for refusing to pay the claim for years.

As for the documents, Ronald Getchey, a San Diego lawyer representing Allstate, told the judge: “We won’t produce them without a protective order (sealing them).”

He questioned whether the $25,000-a-day fine was legal and whether the judge’s order finding them in contempt was too vague.

Plaintiff lawyer Steve Garner of Springfield called those arguments “silliness.”

Getchey argued that the matter is uncertain and noted that the Missouri Supreme Court ruled that the company could return there if Garner tried to collect the $25,000-a-day fine, which would go to Aldridge.

Garner said he was more concerned about getting the documents and going to trial, but he may start collecting the fine for his client.

Getchey told the judge: “We have a principled difference we’re not able to resolve until somebody says what the law is.”

Manners countered: “I’ve already said that, but you just don’t agree.”

Then he set a July trial date, the first time Garner had available.

Getchey noted that was a long time at $25,000 a day.

“We shouldn’t get a $5 million fine because counsel is not available to try the case,” he said.

Manners conceded the point and said he may not increase the daily fine after all.

Herb Denenberg writes for The Bulletin. Denenberg notes Allstate’s recent guilty plea to six federal indictments and discusses several anti-consumer practices of Allstate, including complaints by CFA, the Consumer Federation of America (http://www.consumerfed.org/). Part of his article quotes the CFA report,

“The Allstate Corporation has been at the forefront of the insurance industry in unjustifiably raising home and automobile insurance rates relative to the amount paid out in claims, in using questionable practices to settle claims and in attempting to shift costs to taxpayers.”

EXCESSIVE RATES AND PROFITS BUT ANEMIC PAYOUTS TO POLICYHOLDERS. The report notes that Allstate paid out only 59 percent of the premium dollar on claims to policyholders from 1997 to 2006. The industry average is 65 percent. In other words, CFA argues Allstate should have cut its premiums or perhaps paid out more in claims. But in CFA’s view, Allstate is now charging too much for the benefits delivered to its policyholders.

HIGH CONSUMER COMPLAINTS. The complaints filed against Allstate, many relating to claims practices, are more numerous than almost all of its major competitors. Of 13 major auto insurers, Allstate had the second highest complaint ratio in two recent years. This is based on data collected by the National Association of Insurance Commissioners.

QUESTIONABLE CLAIMS SETTLEMENT PRACTICES. CFA says Allstate has adopted an automated claims settlement procedure designed to cut claims payments to policyholders, without regard to the validity of the claim and without an examination of the claim. As a result, CFA says it can document a systematic underpayment of claims based on aggregate data. The data show that Allstate reduced its payouts by about 20 percent relative to the industry for the year 1996 through 2006.

You can read the entire report at The Denenberg Report

Chris Nichols
www.NicholsTrialLaw.com

Why? Well, the insurance industry has effectively “gagged” anyone from telling the jurors why the case is going to trial. Typically, the reason for that is that the insurance company who pulls the strings on the defendant, WANTS the case to go to trial, because they know that for every case that goes to trial, 99 just give up, and the insurance company gets to pay less than what is “fair and just” as the rules require.

Here are some of the “hidden” rules and insurance practices that you only learn about after you’ve been hurt by someone else’s negligence.

You Can Not Mention the Insurance Company at Trial

Under no circumstances can a Plaintiff mention the word “Insurance” in trial, even though the person who is being sued has insurance. You cannot mention Insurance, nor can your witnesses, including the doctors, police or anyone else who may testify for you. If you do, the judge will grant a “mistrial” and we will have to try the case over again.

NC Rule of Evidence: Rule 411. Liability insurance

Evidence that a person was or was not insured against liability is not admissible upon the issue whether he acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.

Insurance is available in at least 99% of all auto accident cases that go to trial. But, the insurance industry has lobbied the legislature so diligently that it has created a set of court rules that absolutely prohibits the lawyers representing injured people from telling the jury the truth that the little old lady in the defendant’s chair has had no choice in whether she is sitting there or not. She cannot settle the case even if she believes you deserve everything you are asking for.

The insurance company is completely in control of how much to offer the injured person, whether to settle the claim or not, and what they should contest in the lawsuit. So, even if the little old lady sitting in the defendant’s chair wanted to settle the lawsuit for the same amount as what the injured person is requesting, the insurance company won’t offer the money.

In North Carolina, the Plaintiff has virtually no right to sue an insurance company for improperly denying a claim or delaying the payment of what is due. Again, effective political contributions, and legal maneuvering by insurers have resulted in these rules.

Its cheaper to deny the claim than settle.

Believe it or not, insurance companies have saved Billions of dollars since the mid 1990s, by improperly denying claims, and otherwise forcing litigation by paying far below the jury verdict average to settle claims. Frivolous defenses to legitimate claims have resulted in an increase in litigation, against people insured by these companies. This is part of a deliberate claim handling program implemented by McKinsey & Company, the same consulting firm that set up Enron’s business model, at many of the nation’s largest insurance companies. See “Record Insurance Profits” Article

But, in jury selection, jurors often mention that if the injuries are real, the case should have settled with the insurer. That is exactly what the insurance company is hoping for. It doesn’t matter if they offered $0.50 on a claim worth $500,000. The jury will never know, because the lawyers are prohibited from ever mention the settlement negotiations during the trial.

McKinsey & Company counted on this when they told Allstate Insurance in the mid 1990’s to quit treating people with “Good Hands” and instead treat them with “Boxing Gloves.” When Allstate forced more litigation and posted record profits, the rest of the insurance industry followed their lead. It is now standard operating procedure in the insurance industry to spend multiple times what a reasonable settlement would be to fight the claim, simply to prove to injured people and their lawyers that filing a claim for injuries is more trouble than it is worth. Read a Transcript of Anderson Cooper’s Interview with one of Allstate’s Victims

That is because the end result is that most lawyers will not take the cases, and people will not file the claims themselves. These improper denials have led to a huge spike in bankruptcies in the United States, the leading cause of which is an inability to pay for medical bills. So, when jurors turn injured people away, everyone but the person at fault, and their insurer pay for the damage. Instead, the jurors take the financial burden themselves through higher taxes to pay for the bankruptcy. For more, see the article entitled “In Tough Hands” in BusinessWeek.