The legal
system has dealt a blow to Allstate Insurance Company's anti-consumer
customer service practices.
On January
14, 2000, Washington State superior court Judge Phillip G. Hubbard
ruled in summary judgment that Allstate Insurance Company "engaged
in the unauthorized, negligent practice of law" for portraying
itself as a legal representative for the Jones family, and for
convincing the family it had no need to contact an attorney. The
ruling further stated that "...Allstate is...liable for the
injuries and damages which were...caused by their agent's unauthorized
practice of law and negligence."
Judge Hubbard's
ruling is, by far, the most damaging to Allstate, which has been
found guilty of, or cited for, practicing law without a license
by various state attorneys general, state bar associations, court
committees, and departments of insurance. Allstate's assistant
Corporate Counsel Michele Wilk, filed a declaration stating that
Allstate has already been sued in more than 50 lawsuits for the
unauthorized practice of law, breach of fiduciary duties and state
consumer protection act violations.
Allstate's
fraudulent behavior stems from its customer service practices,
which are outlined in Allstate's training manual. The manual was
a closely guarded secret until attorneys and attorneys general
acquired copies and used it to prove Allstate deliberately tried
to convince unrepresented claimants that they did not need attorneys.
The training
manual instructs claims representatives to establish a friendly
"rapport"with injured claimants, to show "genuine empathy," and
to portray themselves as the victims' claims representative. If
the Allstate representative is successful, Allstate pays claimants
as little as possible. Allstate neglects to inform people that
Allstate and injured claimants are adversaries so the best interest
of claimants is never a priority for the insurance company.
In Jones v.
Allstate, an Allstate representative advised Terry Jones literally
to sign away his and his wife Janet's rights. Janet Jones was
severely injured when a teenage driver ran a stop light and struck
Janet's minivan. Terry Jones said, "I believe [the claims representative]
was representing my interests. She told me she was going to."
During the
course of Allstate's interaction with Janet and Terry Jones, the
claims representative sent the Joneses a letter accompanied by
a settlement check for $25,000 and a release form. Allstate had
explained that the teen driver's policy with Allstate had a $25,000
liability limit. Janet's medical expenses from her initial hospital
stay exceeded $75,000. She signed the check offered by Allstate.
That check
included more than an offer for $25,000 on it. Also printed on
the check was the statement: "Full and final settlement of any
and all bodily injury claims arising out of the (more) accident."
Allstate attempted to argue in a summary judgment hearing that
when Janet signed the check she released Allstate from further
responsibility. However, Judge Hubbard signed an order January
18, 2000, striking down Allstate's claim that the signed check
was a valid release. The judge ordered that since the release
language on the check was illegally obtained -- through its breach
of fiduciary duties and the unauthorized practice of law it was
unenforceable.
This ruling
is an important precedent in that all of Allstate's settlement
s with unrepresented claimants who received its "unrepresented
claimants letter" or Quality Service Pledge may be voidable at
the option of the unrepresented claimant.
However, if
Janet Jones had signed the actual Allstate release form, it would
have released from all liability the at-fault teen driver, his
parents, Allstate, and any other party who might be legally responsible
for Janet's injuries. That "other party" was Chrysler, whose minivan
seatbelt buckle disengaged in the accident, causing the partial
ejection of Janet from her vehicle. A month after the accident,
Chrysler recalled its 1992 Voyager Minivan buckles for latch defects.
Signing Allstate's release form would have ensured that Janet
would never be fully compensated for her injuries.
The Joneses
brought suit against Allstate, claiming it had engaged in the
negligent unauthorized practice of law, created and breached fiduciary
duties, committed bad faith and civil fraud, and violated the
Washington Consumer Protection Act.
A personal
injury attorney-expert testified that in his professional opinion,
"...Allstate engaged in the practice of law in promising to give
Janet Jones legal advice and counsel on these sophisticated issues
of tort law and civil procedure and in preparing legal instruments
[the settlement check and release form]."
In his ruling,
Judge Hubbard commented on the adversarial nature of the claims
process.
