Alaska Injury Law Blog

Thousands of Alaskans, including the attorneys at the Alaska Personal Injury Law Group, are awaiting the United States Supreme Court's decision in the Exxon Valdez case, which is set for oral argument on February 27, 2008. In contrast to several punitive damage cases decided by the Supreme Court in recent years, the Court elected not to hear Exxon's constitutional "due process" challenge to the now $2.5 billion (plus interest) punitive damage award. The Court instead limited its review of the Ninth Circuit decision to whether the punitive damage award violates federal maritime law or is inconsistent with the Clean Water Act. Regarding the maritime issue, Exxon asserts there is a longstanding common law maritime rule prohibiting the award of punitive damages against a ship owner based on the conduct of a ship’s master. The historic rationale for this asserted rule, according to Exxon, is that a ship's master must make prompt unilateral decisions without consultation with his far-off superiors and it would be unfair to make the vessel owner responsible for the master's independent reckless conduct. While this rationale may have made sense 100 or 200 years ago, it makes little sense today when communications with a modern commercial vessel are equivalent to communications with a distant land-based commercial operation. If a New York company is responsible for the reckless conduct of its managers at California manufacturing plant, there is no reason why a Houston shipping company should not be responsible for the reckless conduct of its master operating a modern supertanker in Alaska. It will be interesting to see whether the United States Supreme Court thinks the rule advocated by Exxon makes sense today in an age of instant electronic communcation.

I finally wanted to note that Justice Alito recused himself from the Exxon appeal because he owns stock in Exxon. Because a tie goes to the appellee (the plaintiffs here), Exxon will now have to find five votes from the eight remaining justices to overturn the Ninth Circuit decision.

Exxon's Appeal Brief

Plaintiffs' Appeal Brief

The attorneys of the Alaska Personal Injury Law Group continue to watch closely as the insurance commissioner of Florida battles to obtain documents that show Allstate’s institutional bad faith claim handling practices. Allstate is using the same tactics of delay and obfuscation against the regulators that it typically uses in bad faith cases against Allstate in Alaska. A good example is the 12,000 McKinsey & Company documents that Allstate finally produced to the Florida insurance regulators last week, stamped as “trade secrets.”

As part of its public relations campaign, Allstate paints itself as the victim who is trying hard to find and produce the documents covered by the insurance regulators' subpoena. The truth is that these crucial documents about Allstate’s bad faith practices were readily available all along. The McKinsey documents had been catalogued, numbered and scanned in prior bad faith cases, long before the regulators subpoenaed them. These catalogued documents were available to Allstate as paper copies and had also been copied onto computer CD-ROM or DVD. They were available to produce to the Florida insurance regulators with no more effort than a phone call.

There is no valid excuse for Allstate failing to produce the McKinsey documents to the Florida insurance regulators before the January 15 hearing for which they were subpoenaed. Allstate just wanted to hide them from the public and not be questioned about them at the hearings.

Why did Allstate already have these documents readily available in this organized form? Allstate hired the huge international law firm Steptoe & Johnson to fight production of these documents in insurance bad faith cases against Allstate all across the country. That effort is coordinated through the firm’s Phoenix office. Steptoe & Johnson oversaw the organizing, numbering and scanning. When Allstate loses one of these battles and a court finally orders Allstate to produce this evidence of Allstate’s institutionalized bad faith, these documents are produced in this same sequence with the same numbers. It is a package of crucial documents that each insured must fight to see when they sue Allstate for bad faith claim handling.

Continue reading " Allstate Using Same Discovery Dodges Against Regulators As It Uses Against Insureds in Bad Faith Cases " »

We have handled a number of cases at the Alaska Personal Injury Law Group where clients have developed balance and dizziness complaints after suffering a traumatic brain injury (TBI) in automobile crashes or similar assaults to the brain. It is not commonly known that these disorders flow from TBI, and attorneys often miss the connection. These disorders can develop in several ways, but a common mechanism is benign paroxysmal positional vertigo (BPPV). BPPV is a balance and dizziness disorder caused by a problem in the vestibular system of the inner ear which forms part of the body’s balance system. Small particles, or crystals, of the inner ear are dislodged with the trauma and this interferes with the normal function of the inner ear. This can cause episodic vertigo that can be quite disturbing to the client. If untreated, the episodes can recur for years and become part of the lasting and unfortunate legacy of TBI.

There are treatments for BPPV through a series of scripted movements by trained therapists designed to put these crystals back in their normal position. This is called a canalith repositioning maneuver, and significant improvement has been experienced by some clients.

To properly diagnose a patient regarding the many potential causes of balance and dizziness problems, a client often undergoes vestibular testing, but it has traditionally been aimed at finding a localized problem, a “site of lesion”. The major limitation of these site-of-lesion tests is that they assess structural and physiological changes within individual sensory or motor components in isolation, rather than in the functional context of balance control. A new type of testing has been developed called the Neurocom Balance Manager, which is designed to provide a comprehensive differential diagnosis of sensory, motor, and central functional impairments of balance control. Developed using methods created by NASA to study balance in astronauts, Neurocom uses a computerized dynamic posturography (CDP) system that professes to offer a more comprehensive means of diagnosing the patient, which hopefully will lead to more specific and helpful treatment.

Source: Mayo Clinic Vertigo Rehabilitation; Mayo Clinic Vestibular Lab; Neurocom International, Inc.

Clients of the Alaska Personal Injury Group often have to decide whether to have knee surgery. When the underlying cause of pain and discomfort is arthritis in the knee, rather than a mechanical problem like a torn ligament, the arthroscopic surgery proposed by orthopedists is often not helpful. A surgeon will admit this if pressed, and now there is a study that addresses this very issue.

In an article just published in the Cochrane Database, researchers studied the outcomes of arthroscopic debridement surgery in patients with knee arthritis after reviewing the published literature regarding such surgeries. The researchers found that arthroscopic surgery does not improve pain or ability to function when compared to simple placebo and sham surgery. They also concluded that arthroscopic surgery led to little or no difference in pain levels or the ability to function in comparison to simple lavage (washing out) of the knee joint. Further, having arthroscopic surgery also comes with the additional risks of surgery, such as pain, infection, or embolism. The cautions that come with relying on this data is that the authors ultimately relied on only 3 out of the 18 studies they reviewed, and it is clear that some patients with particular injuries can be helped with arthroscopic surgery. The trick is for the patient to figure out if they are really in that small subset of patients who can be helped by the procedure.

With arthroscopic surgery of questionable value where no operable condition is causing their problems, clients are thus faced with relying on more conservative measures to ameliorate their pain and limitation from knee arthritis, such as physical therapy, viscosupplementation (injecting a cushioning fluid into the joint space), and medications to forestall more serious surgery like total knee replacement.

Source: http://www.mrw.interscience.wiley.com/cochrane/clsysrev/articles/CD005118/frame.html

One of the unfortunate outcomes of serious orthopedic trauma faced by the clients of the Alaska Personal Injury Law Group is surgery for injured spinal discs. Whether it is soon after an accident like an automobile crash, or years later due to progression of their condition, clients often struggle with the decision about whether to have spinal surgery.

A harsh reality is that the “gold standard” in cervical disc surgery is removal of the herniated disc and fusion of the joint with bone and metal plates. The unfortunate results of this type of surgery often include recurrence of the original neck, back and arm pain, a limitation of neck movement, and increased stress on adjacent spinal levels that leads to arthritic changes in that joint, and sometimes yet another fusion. When a person’s own bone is taken for the fusion from the iliac crest of the hip, that operative site can also be a source of pain or disability.

In recent years, there have finally been some advances in spinal surgery for herniated discs with the development of disc implants intended to avoid fusion and preserve joint movement in the injured vertebral segment. There are several manufacturers now performing clinical studies of their new implants. In the journal Spine, a two year study of the Bryan cervical disc implants was just published. The researchers followed 115 patients, 56 of whom had the new implants. Their study showed that the patients receiving the implants had less arm and neck pain when evaluated at one and two years after surgery, and they retained greater neck movement than in the patients receiving a fusion. The researchers believe that retention of greater movement will ultimately lead to less biomechanical stress on adjacent joints, and therefore to less injury to surrounding joints.

The surgeries involved only one cervical disc level with a focal disc herniation. Patients with retrovertebral compression, facet pathology, multilevel stenosis or significant degeneration are not currently deemed to be candidates for this type of implant.

Source: Artificial Disc Versus Fusion: A Prospective Randomized Study With 2-Year Follow-Up On 99 Patients, Spine. 2007;32(26):2933-2940; http://www.medscape.com/viewarticle/568297; http://www.bryandisc.com/about-bryan-disc.html

Will Allstate finally have to make public its own internal documents about claim handling practices and procedures that many insureds allege are bad faith programs that cheat them of the insurance coverage they paid for? Attorneys of the Alaska Personal Injury Law Group are watching closely as insurance regulators try to obtain these documents. Many of these documents are the very same ones our lawyers have been trying to get from Allstate in Alaska cases alleging bad faith and fraud by Allstate against its own Alaska insureds when they made a claim for the coverage benefits they paid for.

As I reported in an earlier article, the Florida Office of Insurance Regulation (FLOIR) subpoenaed from Allstate documents about its bad faith program for systematically low-balling and underpaying claims. This program, instituted in Alaska and the rest of the country in 1995, was created with the help of the McKinsey Company. The Office of Insurance Regulation states in a brief to the court that the insurance statutes required Allstate to provide these documents in response to its subpoena. More importantly, the regulators state that Allstate purposefully failed to provide the documents and willfully violated the insurance code by withholding them.

FLOIR also states that Allstate made misrepresentations to the court about documents it did produce. As Allstate typically does in bad faith insurance claims against it in Alaska and elsewhere, Allstate pointed to the thousands of documents it had produced. Allstate's trick, of course, is to produce documents the opponent already has or that are meaningless, while sparing no effort to hide the important documents. FLOIR also stated to the court that many of the documents Allstate did produce were public documents it already had.

FLOIR also told the court that Allstate “falsely marked” as “Trade Secret” many documents that were publicly available, many even available on the internet. This "trade secret" ploy is a favorite of Allstate and other insurers in bad faith cases. Evidence harmful to the insurer is a “trade secret,” even if it is on the internet or otherwise publicly available. In our Alaska bad faith cases, Allstate has repeatedly claimed "trade secret" protection for documents we were able to find by investigating public sources.

Continue reading " Insurance Commissioner Says Allstate Willfully Violated Insurance Code " »

Depression is often one of the difficult conditions clients of the Alaska Personal Injury Law Group face following traumatic brain injury (TBI). Depression is suffered by about 5% of the general population, but over 40% of those recoverying from head trauma can suffer from depression. Until now, it has been difficult to understand how depression and TBI are linked, although that association has long been known.

Studying athletes who suffered concussions, the researchers at the Montreal Neurological Institute of McGill University have shown the neurological basis for depression in a study published this week in the Archives of General Psychiatry. They studied 40 concussion victims against healthy subjects and found through the use of functional magnetic resonance imaging (fMRI) that the same areas of the brain were affected in both the athletes and those patients with major depression. Abnormal neural activity was found in the dorsolateral prefrontal cortex and striatum, as well as attenuated deactivation in the medial and temporal regions. Gray matter loss was also confirmed using Voxel based morphometry (VBM), a neuroimaging analysis technique that analyzes focal differences in brain volume.

This type of medical advance in imaging will help clients and care providers better understand why depressed mood is occurring after someone has had a traumatic brain injury. Ultimately, it is hoped that such imaging will lead to better diagnosis and treatment for those who suffer the devastating consequences of traumatic brain injury.

Source: Neural Substrates of Symptoms of Depression Following Concussion in Male Athletes With Persisting Postconcussion Symptoms, Arch Gen Psychiatry. 2008;65(1):81-89. http://archpsyc.ama-assn.org/cgi/content/abstract/65/1/81

Two attorneys with the Alaska Personal Injury Law Group, W. Michael Moody and Richard E. Vollertsen, were recently selected to be listed in Alaska Super Lawyers 2007, a publication of Washington Law & Politics magazine.

Mr. Moody received his law degree from the University of Arizona in 1972 where he served as Editor-in-Chief of the Law Review and received the academic award of Order of the Coif. He served as a law clerk to Judges Thomas Stewart and Victor Carlson in Juneau before moving to Anchorage. Mr. Moody has practiced law in Alaska since 1975 specializing in representing those injured by negligence or defective products, and claims against insurance companies for fraud and bad faith conduct against their policyholders.

Mr. Vollertsen was also selected as an Alaska Super Lawyer. Mr. Vollertsen has been a member of the Atkinson, Conway & Gagnon law firm since 1982. His practice includes complex litigation matters primarily involving products liability, wrongful death, and personal injury. He served as Law Clerk to Chief Justice Edmund Burke of the Alaska Supreme Court. Mr. Vollertsen was also editor-in-chief of University of San Francisco Law Review, 1980-81, and contributing editor to Alaska Court Review, 1983-2000.

The rigorous merit-based selection process began early in the year, with invitations to participate in the nominations process going out to over 1,400 attorneys in Alaska. In addition, Law & Politics’ research department conducted independent candidate searches through professional databases, legal trade journals, and meetings with law firms. The candidates were then evaluated by the Law & Politics research department. This evaluation process included examination of candidates’ background and experience, followed by a peer evaluation from other Alaskan attorneys in the practice area. The final candidates selected were those with the highest point totals from each category, and included only five (5) percent of all attorneys in Alaska.

Mr. Moody and Mr. Vollertsen are also all AV rated by Martindale Hubbell, the highest national rating for legal ability and ethics, and have been listed in the Best Lawyers in America for over 10 years.

Bruce E. Gagnon, Robert J. Dickson, and Jerome H. Juday, also with the Atkinson, Conway & Gagnon law firm, were also selected as Alaska Super Lawyers in their respective specialties.

The Alaska Personal Injury Law Group often handles traumatic brain injuries(TBI). With severe brain injuries, the impairments suffered by the client are usually unmistakable to the client's care providers and neurological experts testifying on their behalf. With “mild” brain injuries—although there is no such thing as a “mild” brain injury when it happens to you—the impairments are more nuanced and difficult to determine with standard neuroimaging or routine neurological and neuropsychological testing. Often clinicians have concluded that no impairments have occurred simply because there was minimal or no loss of consciousness reported when the brain injury was sustained. Now, advances in neurological imaging are establishing what we have already found to be true in our practice—cognitive impairments can occur even with minimal or no loss of consciousness.

In a study published in the October issue of the journal Brain, researchers at the University of Illinois’ Chicago College of Medicine report that diffusion tensor imaging (DTI) can identify structural changes in the brain’s white matter—which is particularly vulnerable to injury—even in patients identified as having minimal or no loss of consciousness. They studied 37 TBI patients with both diffusion tensor imaging and neuropsychological testing to evaluate memory, attention, and executive function. All the patients were at least six months post-injury, and most were highly functioning, i.e., in school or working at the time of evaluation. The structural white matter changes found by DTI correlated to cognitive deficits that were observable.

The researchers were also able to determine axonal damage—a tearing of the axons that allow one neuron to communicate with another—occurring the brain’s white matter. This differs from injury to the myelin, which is the protective sheath around the axons. Injury to the myelin can interrupt the signals between the brain and other parts of the body. The study showed that all severities of brain injury, even those typically viewed as “mild,” caused some degree of axonal damage, while myelin damage was only apparent in moderate to severe TBI.

These findings help us explain why TBI victims can often experience cognitive deficits that one would not expect when their MRI and CT films show no focal lesions. There is now objective evidence that can explain why clients suffer from cognitive impairments even when little or no loss of consciousness has occurred.

Source: White Matter Integrity and Cognition in Chronic Traumatic Brain Injury: A Diffusion Tensor Imaging Study, http://brain.oxfordjournals.org/cgi/content/abstract/awm216v1

Testimony offered in a federal trial in Ohio against Berkeley Nutriceuticals has disclosed that the company faked data regarding the effectiveness of its sexual enhancement product, Enzyte. When I previously wrote about this trial, www.alaskainjurylawblog.com/2008/01/dietary_supplement_company_fac.html, I fully expected to hear that such evidence had been uncovered. The diet supplement industry is virtually unregulated, and manufacturers are not required to provide scientific data or obtain pre-market approval for their products before they are placed on the market. Borrowing a page from the playbook of ephedra manufacturers, supplement manufacturers like Berkeley often go even further to make up data to show that their products are safe and supposedly work. Such faked data can be very effective in bilking consumers out of millions. I encountered this unfortunate fact in the litigation the Alaska Injury Law Group brought in Talbert v. E’ola Products, Inc., the first successful jury trial brought against an ephedra manufacturer.

James Teagarden, VP of Operations at Berkeley, testified that the company created fictitious doctors to endorse the pills, faked a customer satisfaction survey, and made up data to back up claims about Enzyte’s effectiveness. He also testified that the company’s president, Steve Warshak, was intimately involved in the fraud.

In addition to the fraudulent data, the company’s first-time customers were automatically enrolled in a “continuity program” that sent them Enzyte every month and charged their credit cards without authorization. If customers complained, employees were instructed to “make it as difficult as possible” for them to get their money back.

Source:
http://news.enquirer.com/apps/pbcs.dll/article?AID=/20080115/NEWS01/301150105

The coming issue of Clinical Cancer Research will publish two case reports concerning the progression of prostate cancer believed to have been caused by a dietary supplement "spiked" with pharmaceutical compounds. "Spiking" is, unfortunately, an all too common practice in that industry. While claiming to sell "all natural" products, and taking advantage of the regulatory limitations imposed on the FDA under the Dietary Supplement Heath and Education Act (DSHEA), www.fda.gov/opacom/laws/dshea.html , diet supplement manufacturers put consumers at risk by "spiking" their products with pharmaceutical compounds they know to work, when the herbal compounds do not. Unlike prescription and over-the-counter drugs, current law does not require nutritional supplements to undergo pre-market testing or approval for safety and efficacy.

This was a key issue in the first jury verdict in the nation against an ephedra manufacturer, a case the Alaska Personal Injury Group brought: Talbert v. E'ola Products, Inc., www.cfsan.fda.gov/~dms/ds-ephed.html . There, the manufacturer, whose product has since been confiscated by the FDA, "spiked" its ephedra product with the pharmaceutical drug, ephedrine hydrochloride. www.fda.gov/bbs/topics/ANSWERS/2001/ANS01114.html . In that instance, it caused a healthy young woman to suffer a cerebellar stroke.

The product analyzed by the researchers at University of Texas Southwestern Medical Center has led to an equally horrific outcome--virulent prostate cancer. The researchers report in the journal that the diet supplement, which they have declined to identify by name, contained the sex hormones testosterone and estradiol. Laboratory tests of the product on human prostate cancer cells found it to be a more potent stimulator of cancer cell growth than testosterone alone. Such compounds cannot be sold except by prescription. The spiked hormones are believed to have caused the two men to develop rapidly advancing prostate cancer within months of using the dietary supplement. Both men, before using the product, had low levels of prostate-specific antigen (PSA), a signal for prostate cancer and then presented with widespread cancer within six months, which is unusual. One of the men has died; the other is in the final stages of the disease and is expected to die within months. Notified of these findings, the FDA sent a warning letter to the manufacturer, and the supplement has now been removed from the market.

In addition to failing to list all the steroid hormones contained in the product, the researchers also found that the product’s label stated ingredients that were not present, and it also misrepresented the concentrations of the ingredients present. These kinds of failings are very common in this industry, and arise because of the lack of regulation over the industry's manufacturing processes. This type of misrepresentation and mislabeling is not just blatant consumer fraud, it can be dangerous when the concentration of an ingredient is too high.

Continue reading " Diet Supplement Found To Exacerbate Prostate Cancer--Another Spiked Product " »

A federal court in San Francisco has ordered the Department of Veterans Affairs to release documents concerning its denial of care to veterans seeking care for conditions such as PTSD. The order is expected to permit a class action against the VA to go forward. The litigation was brought by several nonprofit groups, Disability Rights Advocates, Veterans for Common Sense and Veterans United for Truth. The complaint alleges that the VA’s system for handling disability claims and appeals is so dysfunctional that it violates the constitutional and statutory rights of veterans. The suit also seeks court orders mandating the VA to provide immediate medical and psychological help to returning troops, and to screen them for suicide risks.

Recent investigations by various news organizations have shown that the VA has a backlog of over 600,000 applications and a claim can take as long as 12 years to be resolved through the appeal process. The McClatchy newspapers reported that veterans wait, on average, 183 days for the VA to initially decide a claim. In 2005, CBS reported that at least 6,256 suicides had occurred among those who served. Last November, it reported that veterans were killing themselves at a rate of 120 per week.

Source: Vets Cleared to Sue US Over PTSD Claims, January 17, 2008, www.commondreams.org.

On January 17, 2008, the New England Journal of Medicine released a study that put numbers to what we already knew to be true: drug manufacturers have more data, particularly negative findings, that they are not making public. Examining the literature concerning antidepressants, the study showed that 94% of the studies published by drug manufacturers discussed only the positive effects of the medication being studied. Drug manufacturers must report the results of all clinical trials to the FDA. When the entirety of the data submitted to the FDA from the manufacturers’ trials was examined, however, efficacy was shown in only 51% of the studies.

Why would this be the case? One could suppose that journals are more interested in publishing data establishing efficacy, as it may be deemed more “exciting,” perhaps medicine’s version of the newspaper adage, “if it bleeds, it leads.” But the more likely reason is what is found in most drug and products liability litigation: it is not in the corporation’s economic interests to release negative information about a product. This is the prime motivator behind the drug manufacturers’ decisions to focus its publication efforts on only those studies that show efficacy, which would, of course, encourage physicians to prescribe and consumers to use the medications, thereby increasing sales.

The FDA Amendment Act of 2007 passed by Congress last September offers a partial solution to the dilemma. It requires that the data from all the clinical trials performed by the manufacturer and submitted to the FDA be made available to the public. The NIH and FDA will be responsible for maintaining a database of the clinical trials completed by manufacturers. The public will have access, however, only to data on drugs the FDA has approved for sale.

We have seen stunning and regressive changes during the Bush administration concerning information such as this, where scientific data and thought were suppressed for political purposes. Allowing researchers, clinicians, and the public access to this type of scientific data is the only responsible thing to do, and it should have happened long ago. Let the sun shine in.

Source: New England Journal of Medicine, Selective Publication of Antidepressant Trials and Its Influence on Apparent Efficacy, Volume 358:252-260 January 17, 2008 Number 3 ; www.fda.gov

Yesterday I wrote an article about Allstate’s failure to provide documents required by a subpoena from the Florida Office of Insurance Regulation. Some of those important documents are the same claim handling documents that members of the Alaska Personal Injury Law Group are trying to get from Allstate in a class action for bad faith and fraud against Alaska insureds.

The documents we are seeking have to do with special programs Allstate implemented in 1995. There have been assertions in bad faith cases across the country that these programs systematically underpay compensation Allstate owes to its own insureds under their Allstate policies.

As noted in my article yesterday, the Florida Commissioner of Insurance suspended what was supposed to have been a two day hearing after only a half day, so he could consider what sanction to impose on Allstate to make them produce the documents. Since a court in Missouri was already fining Allstate $25,000 a day for refusing to produce documents, he concluded a fine would have no effect on Allstate. So he suspended the authority of three Allstate companies to write new insurance in Florida. The companies were Allstate Insurance Company, Allstate Indemnity Company, and Allstate Property and Casualty Company. He later issued a Final Order that expanded the list to include all ten Allstate companies that had been served with the subpoena.

It will be very interesting to see how this plays out. How far will Allstate go to keep these important documents from the public eye? If they do not show an underpayment scheme, why is Allstate taking such risks to hide them from regulators and the public?

Have you ever felt like insurance rates hardly ever go down, even when the insurance industry makes record profits? Funny you should feel that way. Two current news items may help explain why. Both involve attempts by Allstate Insurance companies to obtain very large rate increases.

The first occurred in Florida. Allstate submitted proposed rate increases for various Allstate companies that would have increased rates by a whopping 28 to 42 percent. Insurance regulators denied the rate applications and Allstate appealed. At the beginning of the appeal hearing, Allstate withdrew its applications for the huge rate increases. The Office of Insurance Regulation had subpoenaed many documents for the hearing, but Allstate failed to provide them. After half a day, the Insurance Commissioner cancelled the hearing to consider sanctions against Allstate.

Inquiring minds would ask: Why would an insurance company withdraw its request for such huge rate increases if they were truly justified by the actual loss experience? If the loss experience was that bad, wouldn’t the insurance company need those increases to stay in business? Wouldn’t the insurer fight for those necessary rate increases? Some in Florida must have been asking those same questions, as the state Senate immediately announced it would require Allstate to attend hearings and testify.

Despite beating a hasty retreat by withdrawing its rate filing, Allstate said it was happy to be at the division of insurance hearing. Employing a tactic familiar to lawyers who have handled bad faith cases against Allstate, the company also touted that it had produced thousands of documents. To the contrary, state officials responded that the documents Allstate provided were irrelevant and not the important documents they had requested. Lawyers experienced in bad faith cases against Allstate were not surprised that Allstate crowed about the thousands of unresponsive documents it had produced, since insureds suing Allstate for bad faith see these same tactics repeatedly.

The subpoena by the Florida insurance regulators listed many of the very same documents that lawyers of the Alaska Personal Injury Law Group have been trying to get from Allstate. Mr. O'Donnell and I are counsel in a class action against Allstate alleging various forms of fraud and bad faith claim handling. That case is focused in part on the Allstate claim handling program called Claim Core Process Redesign (CCPR) implemented by Allstate in 1995. Allstate itself described this as a "radical" change in the traditional claim handling handling process. Many lawsuits have been filed claiming that the system systematically underpays claims. An integral part of CCPR is the use of Colossus, a computer program that Allstate can "tune" to produce reduced claim evaluations. In categories 39 through 50, Florida insurance regulators are trying to get these same documents about CCPR and Colossus from Allstate.

The second curious rate application occurred in California, where Allstate sought a 9.3% increase in homeowners insurance rates, based on the assertion that Allstate had invested $82 million in low income housing in inner cities and rural areas. Bet you didn’t think an insurer could increase your rates based on an investment that had nothing to do with the actual loss experience and actual loss ratio on the coverage. In contrast to Allstate’s request for this hefty rate increase, its major competitors actually lowered their rates by up to 20%.

How do these rate matters from Florida and California apply to Alaska?

Continue reading " Good Hands Turn to Boxing Gloves When Regulators Question Allstate's Rate Increases " »