Articles Posted in Automobile Injuries

Alaska Personal Injury Law Group attorneys have waged many legal battles to force Allstate to produce documents that are relevant to insurance “bad faith” claims against the insurer by injured Alaskans. These claims have alleged that Allstate unfairly and unreasonably delayed and “low balled” their personal injury insurance claims. Significantly, the Florida Department of Insurance, Office of Insurance Regulation (OIR) recently suspended Allstate’s license to write new insurance in that state because Allstate refused to produce documents requested by the Office of Insurance Regulation (OIR) regarding Allstate’s claim practices. That suspension order was recently affirmed by the Florida Court of Appeals, which wrote that “Allstate’s willful, indeed potentially criminal, failure to comply with its disclosure obligations has prevented OIR from adequately investigating its reasoned belief that Allstate is systematically defrauding its policyholders.” Allstate Floridian, et. al. v. Office of Insurance Regulation, 2008 WL 2048349 (Fla. App., May 14, 2008) Forcing the insurer to produce the relevant documents is key to any successful insurance “bad faith” case. We have often gone back to court repeatedly to ensure that we get the evidence injured insureds need to prove their claim. We are encouraged by the Florida court’s firm stance on this issue.

Allstate has finally made public its controversial “McKinsey Documents” which describe the development of its self-described “radical” claims handling program. Allstate made these documents public just days after a Florida court affirmed an order from the Florida Division of Insurance prohibiting Allstate from writing any new business in that state until it produced those documents to the Division of Insurance there. Download file The Alaska Personal Injury Law Group already has a copy of many of the McKinsey Documents, having obtained a court order requiring Allstate to produce them in litigation pending in Alaska. From these documents and other sources, the Alaska Personal Injury Law group is familiar with Allstate’s self-described “radical” claims program designed by the international business consulting firm McKinsey & Company. According to Allstate records, this program has generated hundreds of millions of dollars in additional profit for Allstate’s shareholders and executives. The program, called Claims Core Process Redesign or “CCPR,” had three key components: (1) discouraging claimants from hiring attorneys because McKinsey’s extensive closed-claim study showed that represented claimants, even after adjusting for the same type of claim, were paid far more than unrepresented claimants; (2) arbitrarily and systematically depressing claim valuations through a centrally “tuned” claims evaluation computer program with the not-so-friendly name of “Colossus;” and (3) vigorously litigating against claimants who did not submit to Allstate’s new arbitrarily-lowered claim valuations (candidly called the “Boxing Gloves” treatment by McKinsey and Allstate, as contrasted with the “Good Hands” treatment given to claimants who agreed to Allstate’s valuations). For the last 10 years, Allstate has doggedly refused to produce the McKinsey Documents in cases alleging bad faith claims handling. In the few cases in which courts have ordered Allstate to produce the McKinsey Documents (like one currently being handled by the Alaska Personal Injury Law Group), the court imposed strict confidentially rules based on Allstate’s claim that the documents were allegedly important trade secrets. Allstate produced 12,929 pages of McKinsey Documents to the Alaska Personal Injury Law Group under protective order. The Alaska Injury Law Group is now looking forward to using these documents without the burdensome confidentiality restrictions previously advocated by Allstate.

The insured received serious personal injuries while riding in a car that was struck by another motor vehicle. She settled with Safeco, the insurance company of the negligent driver, for the facial policy limits of $50,000, without payment of any add-ons for interest or attorney fees. She then made a claim for her uncompensated damages under the underinsured motorist (UIM) coverage of her own policies with Allstate. After hearing all the evidence, the arbitrators found her damages to be $118,432.

A primary issue on appeal was whether Allstate was entitled to an offset of the $50,000 paid by Safeco. The Supreme Court ruled that Allstate was entitled to such an offset even though Allstate had not pled or otherwise asserted the right to an offset to the arbitrators. The offset was deemed proper based on the language of the Alaska statutes, the purpose of UIM coverage, and the terms of the Allstate policy.

A second issue was whether Allstate had to pay interest and attorney fees on the entire $118, 432, which included $50,000 of the insured’s damages that had been paid by Safeco. The Court ruled that Allstate did not; because these amounts could have been recovered under the Safeco policy, the insured was not “underinsured” as to those amounts. The Court thus created a crucial distinction in underinsured motorist claims. It reaffirmed the rule of the earlier Coughlin case that if a person obtains the policy limits of the adverse driver, they have exhausted that policy for purposes of qualifying to bring a claim for underinsured motorist coverage against their own insurance company, even though they did not obtain the add-ons available under that policy. But because they could have pursued the add-ons under the first policy, their claim for add-ons to the amount paid under the first policy is not a proper element of the subsequent UIM claim. Sidney v. Allstate Insurance Company, Opinion 6220, January 11, 2008.