Allstate Insurance Co. has been held liable by a Pennsylvania court for illegally discouraging consumers from obtaining legal counsel to resolve their personal injury claims against the company. A hearing to set civil penalties against Allstate has been scheduled for Feb. 15, 2001.
Pennsylvania Attorney General Mike Fisher said Commonwealth Court Judge Dan Pellegrini granted his motion for summary judgment following a December 1998 lawsuit that accused Allstate of willfully misleading consumers. Specifically, Fisher’s suit alleged that Allstate provided consumers with personal letters and form documents that touted the benefits of allowing the company to settle their claims against its policyholders without hiring an attorney.
Pennsylvania was the only state to file a lawsuit against Allstate regarding its “Quality Service Pledge,” “Authorization to Furnish Medical/Employment Information,”and a form titled “Do I Need An Attorney?” According to the lawsuit filed by Fisher’s Bureau of Consumer Protection, the letters and forms encouraged consumers to allow Allstate to settle their claims without hiring an attorney to the detriment of consumers and the benefit of Allstate.
Fisher said the “Quality Service Pledge” claimed that the company would act in the interest of consumers who were not insured by Allstate by conducting a quick and fair investigation of the facts and determining if the potential claimant is eligible to receive compensation for any injuries.
According to the lawsuit, the “Do I Need An Attorney?” form misrepresented to consumers that it was in their best interest to deal directly with Allstate. A separate document allegedly gave Allstate authorization to obtain consumers’ medical and employment information that could be shared with other interested parties.
In its opinion, the court determined that the information provided to consumers was misleading and deceptive. In regards to the “Do I Need An Attorney?” form, Judge Pellegrini ruled that “clearly the intent of this document is to sway the claimant away from using an attorney to settle his or her claim and to suggest that there is no benefit to using an attorney because to do so might net a smaller settlement.”
Judge Pellegrini also ruled that the “Authorization to Furnish Medical/Employment Information” form and cover letter gave consumers conflicting information about the use and release of the information.
The court wrote, “not only is this conflicting information likely to cause confusion and misunderstanding, but without the benefit of an attorney to review the document, the claimant could lose any benefit in a settlement and the information could be used against him or her if the matter went to litigation.”
“After a thorough review of Allstate’s internal documents the court concluded that the company’s activities were designed to boost its bottom line by urging consumers to do without legal representation,” Fisher said.
The court granted Fisher’s motion for summary judgment on January 18, stating “because it was Allstate’s intent to create confusion in the minds of its third party claimants its conduct was willful and in violation of the Consumer Protection Law.” Allstate’s motion for summary judgment was denied.
“We contended and the court has agreed that Allstate could not at the same time act in the best interest of its policyholders and the very people they injured,” Fisher said. “This ruling ensures that the rights of consumers are protected and no longer obstructed.” Following the lawsuit, Allstate significantly changed the language used in the personal letters and form documents that were the subject of the Commonwealth’s case.
A hearing to set civil penalties against Allstate has been scheduled for Thursday, February 15. Fisher’s Office is seeking as much as $1,000 per violation.
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