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The Conn. insurance commissioner has ordered Allstate to stop its practice of discouraging injured accident victims from hiring lawyers. A private class action suit alleges that Allstate is engaging in unfair trade practices and making unreasonably low settlement offers to unrepresented claimaints. Rev. 11/02/06
Site Link: What To Do if You're In An Accident Recommended Links Connecticut State Insurance Commission
Site Link: What To Do if You're In An Accident Recommended Links Connecticut State Insurance Commission
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Connecticut Regulators Order By Susan K. Smith, Atty. On October 1, 1998, Connecticut State Insurance Commissioner George M. Reider issued a letter order to Allstate Insurance Company withdrawing agency approval for Allstate's practice of mailing "Do I Need an Attorney?" fliers to victims of accidents with Allstate's insureds. Full text of Commissioner Reider's letter. Commissioner Reider's action was supported by an opinion of Connecticut Attorney General Richard Blumenthal. The opinion was based upon Public Act 97-58, which prohibits insurers from advising or discouraging injured accident victims from hiring attorneys for their claims against insurance companies. The Formal Opinion of the Attorney General concluded first that the statute was constitutional and did not violate the First Amendment. Second, he concluded that taken as a whole, the flier advises against the need for an attorney and therefore violates State law. Mr. Blumenthal stated in an interview given to The Connecticut Law Tribune that the flier "is a thinly-disguised ploy to keep accident victims from protecting their legal rights. These rights include advice from an attorney -- especially before other rights are surrendered or compromised."
Allstate's practices have caused controversy over the last several years in Connecticut and other states. Allstate has been accused of discouraging claimants from engaging lawyers to represent them in claims against the company. The Allstate flier represents that claims are resolved faster if the claimants do not hire lawyers. Ignoring the inherent conflict of interest that exists between Allstate and claimants, Allstate makes a "customer service pledge" promising to treat injured parties as if they are "customers." Allstate encourages claimants to sign authorizations allowing it to obtain all records related to the claim and promises to conduct a prompt investigation on their behalf so that lawyers are not needed. What Allstate does not tell claimants is that the purpose of the campaign is to pay out less on claims. Allstate's own internal training documents contains statistics demonstrating that when lawyers represent claimants, the settlement amounts are two to three times higher than when claimants represent themselves. Allstate employees are rewarded with bonuses based upon the percentage of claims paid to unrepresented claimants./1/
Allstate trains its representatives with a series of telephone scripts and form letters aimed at convincing claimants to avoid lawyers. Claims reps are taught to speak to claimants with empathy in order to gain their trust and make the claimant feel as if the claims rep will be their advocate, not their adversary, which is the reality of the relationship. The scripts provide legal information to claimants so they can obtain key advice without having to consult lawyers./1/ This practice led to the conclusion reached in five states that Allstate was engaging in the unauthorized practice of law./2/ In addition to the state regulatory action, a class action suit is pending in the Federal Court in New Haven, White, et al v. Allstate (Dorsey, J.). The suit seeks money damages for all claimants who were affected by Allstate's claims practices. The suit alleges that Allstate engages in unfair trade practices by discouraging retention of lawyers and by making unreasonably low settlement offers to unrepresented parties. Some form of action has been taken against Allstate in Pennsylvania, Virginia, Illinois, Texas, West Virginia, New Mexico, New York, New Jersey and North Carolina. -------- 1. Training Manual entitled "Allstate Unrepresented Segment Training Manual" (1995). 2. New Jersey, New York, North Carolina, Virginia, W. VA. 3. The text of the letter is as follows: October 1, 1998 Paul Zitgerman Esq. Re: Communications regarding attorney retention Dear Mr. Zitgerman: As you know, the Insurance Department on January 2, 1998 approved the use of a brochure by Allstate regarding attorney retention. Subsequent to that time, the department and Attorney General Richard Blumenthal received letters of complaint from the Connecticut Trial Lawyers Association and had extensive dialogue with officers of that association and with your company. By letter dated June 3, 1998, you submitted a proposed revised mailer following discussions with my staff. Because complaints had been made both to the Attorney General and to this office, and in order to bring resolution to the conflict rather than extend it, by letter dated June 8, 1998 my staff requested guidance from the Attorney General s Office regarding your proposed revised mailer and shared with that office the correspondence we had with your company and the trial lawyers association association As you know, Attorney General Blumenthal on September 28, 1998 issued an Opinion that the proposed mailer affirmatively advises against the need for or discourages the retention of an attorney. The following was viewed as problematic under the standards set forth in P-A. 97-58.
Read as a whole, and using the "objectively reasonable person" test as used in the Attorney General s opinion, we believe that an objectively reasonable person could indeed conclude that the mailer advises against the need for or discourages the retention of an attorney, contrary to the provisions of PA. 97-58 §1(a). Based on the foregoing, and after consideration of the numerous comments the Insurance Department has received on this matter, including those of your company received as recently as today, the January 2, 1998 approval by the insurance Department of the flyer now in use is hereby withdrawn effective twenty days from the date of this letter The proposed flyer submitted for approval by letter dated June 3, 1998 is hereby disapproved. Meanwhile, we received your new proposed mailer by fax today. We will review the revised mailer as promptly as possible and will contact you with our comments. Please be advised that Conn. Gen. Stat. §38a-19 sets forth certain rights to a hearing for "[a]ny person or insurer aggrieved by any order or decision of the commissioner made without a hearing. Very truly yours, George M. Reider, Jr. |
