The Washington Supreme Court has ruled that an insurance claims adjuster who develops a non-adversarial relationship with a person filing a claim and advises that person on settling the claim is practicing law.
An adjuster can continue advising a claimant if they maintain an adversarial relationship, the court ruled. The court held that did not occur in the case at hand, Janet Jones and Terry Jones v. Allstate Insurance Co. and Jeremy France.
“To suggest that an insurance adjuster should approach a claimant as an adversary, as the court ruling implies, is contrary to how good insurers operatewhich is to help consumers,” Kathleen Jensen, insurance services counsel with the National Association of Independent Insurers (NAII), commented. NAII had filed a friend of the court brief in support of Allstate.
The case stemmed from an accident in which Jeremy France, who was insured by Allstate, ran a stop sign in November 1997 and broad sided a car driven by Janet Jones, causing severe facial and head injuries that required extensive surgery. Although France caused the accident, Jones may have sustained additional injuries because of a faulty seatbelt.
An Allstate adjuster contacted Jones three days later, saying it was Allstate’s policy to provide quality service to anyone involved in an accident with one of its policyholders. The adjuster called Jones and her husband, Terry Jones, frequently over the next two months, assisting them in identifying her medical coverage and obtaining insurance money to pay her medical bills.
In Dec. 1997, Terry Jones told the Allstate adjuster he had consulted attorneys about the possibility of suing the car manufacturer because of a faulty seatbelt. The adjuster then told Jones she could not handle the claim further if they hired an attorney and it would be shifted to another Allstate adjuster, which the Joneses did not want to happen. In January 1998, the initial adjuster sent Jones a check for $25,000, the maximum medical coverage under France’s policy, a release form and a letter explaining the settlement terms and urging Jones to sign the release form. Janet Jones signed and deposited the check.
Terry Jones later felt his wife should not have signed the release and attempted to return the $25,000, but Allstate declined and said the claim was settled and closed.
In its May 9, 2002, ruling, affirming lower court decisions, the Supreme Court held that the Allstate adjuster “was engaged in the practice of law and, as such, shall be held to the standard of care of a practicing attorney.” The court said the adjuster’s conduct “fell below the standard of care of a practicing attorney when she did not disclose her conflict of interest, advised the claimants, Janet and Terry Jones, to sign the release of all claims arising from the accident, and did not either properly advise the Joneses that there were potential legal consequences of signing Allstate’s settlement check and release or refer them to independent counsel.”
The high court remanded the case to the trial court for consideration of the Joneses’ bad faith and civil fraud claims and Consumer Protection Act claim against Allstate, and for consideration of the Joneses’ remaining claims against Allstate and the other parties, as well as the awarding of damages.
Jensen said the ruling could have wide-ranging adverse effects if insurers were forced to regard anyone filing a claim as an adversary.
“Insurers go to great lengths to assist their customers and anyone with whom their policyholders become involved,” Jensen said. “Consumers deserve no less, and such relationships should be encouraged, not discouraged.”
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