News | December 9, 1998

Pennsylvania AG Sues Allstate Over Alleged Deceptive Claims Practices

Pennsylvania Attorney General Mike Fisher yesterday filed a lawsuit against Allstate Insurance, claiming it illegally attempted to dissuade Pennsylvania consumers from obtaining legal counsel to settle their personal injury or property claims against Allstate policyholders.

Fisher said the suit alleges that Allstate Insurance Co. violated the Unfair Trade Practices and Consumer Protection Law and engaged in the unauthorized practice of law.

"We believe Allstate intentionally set out to deceive these consumers by making them believe that they too were in "Good Hands" when all the while the company was acting to protect its own financial interests," Fisher said.

According to the investigation, Allstate, since 1995, has contacted Pennsylvania consumers who were not insured by Allstate, to inform them of the benefits of allowing the company to settle their claims without hiring an attorney.

These consumers received an Allstate "Quality Service Pledge" that claimed the insurance company would act in their interest, conduct a quick and fair investigation of the facts and determine if the potential claimant is eligible to receive compensation for any injuries or property losses.

Allstate also sent consumers a form titled "Do I Need An Attorney?" and a separate document that, once signed, would give the company authorization to obtain consumers' medical and employment information.

The Attorney General complains that, in the "Do I Need An Attorney?" form, Allstate represented that:

  • seeking advice from an attorney is not necessary.
  • according to a study by the Insurance Research Council, claims are settled faster if the potential claimant does not retain an attorney.
  • it is in the best monetary interest of the consumer to deal directly with the insurance company.
  • to obtain court approval for a claim involving a minor, the company would provide an attorney and pay the attorney's fees.

"Consumers have the right to decide for themselves if they want an attorney. They should not base that decision on the series of deceptive statements that we contend Allstate was making," Fisher said. "I find it hard to believe that this insurance company can at the same time represent its policyholders and the very people who were injured—that's just nonsense."

Allstate disagrees with accusations in a lawsuit filed yesterday by the Attorney General and says that it feels strongly that the use of its claims information, including its Quality Service Pledge and "Do I Need An Attorney?" document, is protected by the First Amendment of the United States Constitution and Article I, Section 7 of the Pennsylvania Constitution.

"The controversy being created here is completely unjustified. People with a claim have a right to know what Allstate intends to do for them and they have a right to information about their options to seek a speedy and fair settlement," says Allstate Assistant Vice President Deborah Campbell. "The distribution of these documents demonstrates Allstate's intent to provide fair and quick settlements to all those involved in accidents with Allstate customers," she said.

The suit also alleges that Allstate used deceptive tactics to convince consumers to allow the company full access to their medical and employment records. Potential claimants were not advised that the company could gather information unrelated to the claim itself. Allstate represented that the information only would be used during the claims handling process.

"What the consumer is not told is that this information may be used against them should they decide to sue Allstate's clients," Fisher said. "Consumers have certain rights in these situations and should not be fooled into waiving those rights to their own detriment."

"The Attorney General's lawsuit would deny people with claims their right to information which can help them receive fair and just compensation," she said. "Allstate's documents help people with claims make more informed decisions.

"In particular, we are surprised that the Attorney General has questioned our 'Do I Need An Attorney?' form. For decades, some trial lawyers' advertising has left the impression that every claim needs to be represented by an attorney. In fact, anyone with a claim has the right to choose whether they want legal representation," Campbell said. "We have been talking with the Attorney General's office on this issue for some time, and are disappointed that this action has been taken.

The lawsuit asks the court to:

  • issue a permanent injunction prohibiting Allstate from engaging in deceptive claims practices, including designating itself orally or in writing as the claims representative of a potential claimant.
  • require Allstate to comply with the state's Consumer Protection and Insurance laws.
  • require Allstate to pay a $1,000 civil penalty per violation and a $3,000 penalty for each violation involving a person age 60 or older.
  • require Allstate to pay the Commonwealth's costs of investigation and fees.
  • require Allstate to stop representing the Insurance Research Council as independent and non-biased.

According to Allstate's Campbell, "Allstate's goal is to fairly resolve every claim, regardless of whether legal counsel is involved."

The lawsuit was filed in the Commonwealth Court in Philadelphia by Senior Deputy Attorney General John M. Abel and Deputy Attorney General Katherine H. Rebillard of Fisher's Bureau of Consumer Protection Office in Philadelphia.